Is Forex Trading a Viable Money-Maker?
However, in recent years this traditional approach has been blown apart!
It's now possible for you to make some serious money from the comfort of your own home - regardless of which direction the markets are headed. If you've noticed the daily reports at the close of the markets, you might just focus on the fact that they start the day at one value and end it at another.
But there is actually a lot of fluctuation during the day. For example, if the market opens at USD/EUR 1.2529 and ends at USD/EUR 1.2535, it hasn't only moved by USD 0.0006 during the day - it will have been rising and falling all day long!
Why are these tiny movements getting people so excited? Because it's possible to trade the market and make money for every movement (pip) that it moves. In a falling market, you're selling and in a rising market you're buying.So how can you cash in on this? If you have a computer with a fast Internet connection, you can sign up with a forex platform and start trading for yourself, when you know which signs to look for, of course.
Just remember, the forex markets are always rising or falling, no matter what the economy's like, so there's opportunities to make money every day - even in a recession.
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Charting and Predicting Forex Changes
A forex chart is a graph showing your chosen currency pair (USD/GBP, EUR/USD etc) and their movements over a set length of time. At the bottom of the chart is a timeline, which can be changed to show short or long term currency movements.The right side of the chart shows the price range of the base currency of the pair - for example, the base currency of USD/GBP would be USD. You can also select a chart type.
These include the bar chart, which shows the opening price as a line on the left hand side of the bar and closing price on the right hand side of the bar, with the top and bottom of the bar representing the high and low for the day.
The line chart, which only plots the daily closing prices and the candlestick chart which is a combination of both. The candlestick is the most popular of the charts because it's easier to read. It doesn't have the opening and closing lines, but is has a different colored bar depending on whether the currency's rising or falling.
One of the methods most commonly used to predict the way the market will move is to calculate the pivot points. These points are worked out by taking the high, the low and the closing point of the previous day.The calculations then give you seven points: 3 support (S), 1 pivot and 3 resistance (R). The most important of these are the S1, R1 and pivot point itself. You're looking for a break or reversal of either S1 or R1 - for example - currency drops below the S1 or goes above the R1, before entering the market.
When the market reaches S2, S3 or R2, R3 it's time to exit as the market is likely to start to change. You can invest in an affordable forex trading system software to make predicting your trading success that much easier.
Detailed Strategies for Trading in the Forex Market
Forex Patterns & Probabilities: Trading Strategies for Trending & Range-Bound Markets (Wiley Trading)
Amazon Price: $53.55 (as of 12/29/2009)
List Price: $85.00
"Without a doubt this book is far superior to anything else available on the subject of forex trading. "Forex Patterns and Probabilities" will become a trading classic not only for the tremendous amount of useful information it provides, but for the easy and fun way that the information is presented. The author, Ed Ponsi, presents very detailed strategies and then demonstrates them to the reader in a very concise manner. This is exactly what I needed and what most traders need - clear, unambiguous directions that explain in perfect detail exactly what the trader must do to make money trading."
Release Date: 12/31/1969
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Forex Trading System Software
There are a number of different types of software being talked about in terms of forex trading system software, but they shouldn't be confused because they do totally different things, as you'll soon learn.Forex Trading Robots (Forex Bots) are automated programs that can manage accounts around the clock while waiting for trading opportunities. Because the bot runs without any human intervention, it isn't affected by the pressures a trader goes through while waiting to enter or exit a trade.
To start with you, have to download the software and set up an account, demo the tool, and then test your parameters to make sure they work as expected. Managed accounts are closely monitored by money managers, for which they take a share of the profits. Because you're paying a percentage, there's no commission or other fees to pay.
Signalling Software - Instead of controlling the whole process, for you the signalling software takes information from previous days and generates a set of signals for you to trade with.
The entry signal is based on the historical data, but the exit signal is based on the parameters that you set for the amount of profit you want to take. The next thing you do is to manually start the trade running when the entry signal is reached, and set the 'take profits,' which will be your exit point. You also set a 'stop losses' amount as a safety net.
While having everything automated with a forex trading system software is appealing because of the ability to set it and forget it, it's also a good idea to have some knowledge of what it's doing and why.This can be very useful if something doesn't quite go to plan and you have to rethink your strategy.
Great Investing Tips for the FOREX Market:
The Complete Guide to Currency Trading & Investing: How to Earn High Rates of Return Safely and Take Control of Your Investments
Amazon Price: $16.47 (as of 12/29/2009)
List Price: $24.95
"Both FOREX and investing are very deep subjects. I anticipated that upon reviewing this book, I would be greeted by a stuffy, overblown financial dictionary full of terminology that I couldn't understand. I was wrong. This book takes a very deep and complex subject and breaks it down in to easy to digest chunks that makes FOREX and investing very easy to understand. An easy read, I could not put it down."
Release Date: 12/31/1969
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What Is Forex?
The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends.
The purpose of the foreign exchange market is to assist international trade and investment. The foreign exchange market allows businesses to convert one currency to another. For example, it permits a U.S. business to import European goods and pay Euros, even though the business's income is in U.S. dollars.
In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.
The foreign exchange market is unique because of
*trading volume resulting in market liquidity
*geographical dispersion
*continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 UTC on Sunday until 22:00 UTC Friday
*the variety of factors that affect exchange rates
*the low margins of relative profit compared with other markets of fixed income
*the use of leverage to enhance profit margins with respect to account size
As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks. According to the Bank for International Settlements, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. Trading in the world's main financial markets accounted for $3.21 trillion of this.
This approximately $3.21 trillion in main foreign exchange market turnover was broken down as follows:
*$1.005 trillion in spot transactions
*$362 billion in outright forwards
*$1.714 trillion in foreign exchange swaps
*$129 billion estimated gaps in reporting
