I was in Ottawa, Canada earlier on this year. What struck me the most (aside from the fresh air, and the fact that no one I met actually said “oot and aboot” instead of “out and about”) was the muted reaction to the World Economic crisis. The atmosphere didn’t have that heaviness to it. It seemed like they were fine, and were going to remain so…unless you count the suicidal bellhop at my hotel who tried to convince me that Ottawa was a cr*phole and that I needed to get out before the shadows got me.

This is relevant because today the Canada job report is out. They lost 82,000 jobs, against expectations of 46,000. Unemployment was also up considerably. It seems that Canada is making a late entry into the “we are screwed” category of countries. To be fair, Canada has had it’s fair share of bad news; these items just didn’t have the biggest impact on my Forex Trading.

I mentioned previously that the global economic environment has been a somewhat harsh classroom for people learning about Forex Trading. You want to keep things simple. You want to be able to draw conclusions from established correlations. Consequently, it has been easy to see Oil having a good day, and generally assume that the Canadian Dollar would have a good day as well. This correlation has served well on the USD/CAD Currency Pair, even in this Environment.

Throw in a really crappy national economy in Canada and this is ruined. Oil might have an up-day, stocks might do alright, but bad news out of Canada would mean it would be even less likely that it’s currency would rise as expected.

In other news, the Swiss National Bank started a Global Forex War! Well, not really. They caused the Swiss currency to lose value by selling their own currency. The Swiss Franc has been doing quite well this Economic Crisis. Having a strong currency in this climate is bad for business and trade…exports mainly. That’s why the US Treasury Robot Secretary made comments about China earlier on this year. Low Value currency = Decent money from exports.

The issue here is that Switzerland is part of the European “Community”. Such an action was unexpected, even shocking, because it is blatantly selfish. The rest of the EU will be affected, and not necessarily in a positive way. Still, it’s all about Self-preservation. If, however, the rest of European Union decides to respond in kind…then it could get ugly. Bring on the war!

This highlights a key issue in Forex Trading. NEVER TAKE ANYTHING FOR GRANTED. Stay sharp. Always watch for the change that is coming. That way you won’t suffer too much when it happens.

Day trading is a way of trading that generally relates to entering and exiting trades such that all positions are closed off before the end of the trading day. As a style, it refers more to people who are willing to execute multiple trades within a relatively short period, attempting to make money off what more long-term traders would see as fluctuations.

Some seasoned Forex traders prefer this method as opposed to long-term methods for various reasons. There is instant gratification. You can see the results of your efforts in shorter periods. It can be very profitable, particularly if you have a large amount of money in your account. Large institutions engage in this sort of trading quite a bit because they have millions, maybe billions in their accounts. A very small move might earn the small-time trader – i.e. me – only a few hundred dollars. That same “fluctuation” might earn the big boys tens of thousands of dollars or more. It means that you have many more opportunities to open positions and thus, make profits. Unfortunately, it also means you have many more opportunities to lose your money. As with all forms of trading, the trick is managing your money effectively; something that is a lot more difficult when operating in shorter time frames.

One of the obstacles cited by some traders in their case against day trading is the necessity of spending more time in trading mode. This means staring at a computer screen, for most people. It can also mean listening to news, constantly browsing the information websites etc. These traders may be able to overcome the higher risks that Day Trading might entail; they just don’t have the time to do that. This is where an automated system comes in. If any of these traders could “program” his trading system into a Forex Trading Software, then that problem would be solved. In that situation, the trader no longer has to devote all that time. Other tasks can be done. When there is a Buy or Sell signal, the trader can have a quick look at the markets and confirm this by opening the position.

It is also possible to have the software enter and exit trades for you, hence the term “automated”. To use this, the trader would have to have complete trust in his system. Many automated systems are now available from a large variety of traders and gurus. If you feel comfortable enough, you can try one. It’s easy enough to test on a demo account. If you wish to try any of these on a live account, then you should start out using the signals, while you actually enter the trades yourself. They usually have a free trial period, so you can evaluate whether or not you are comfortable using them. That way, if it doesn’t work out, you can get your money back, or just not buy the full product.

As with any of the other trading styles, techniques or whatever you might choose to call them, this one has takers and those who are against it. Some experts argue that it is simply not possible to do any meaningful analysis when operating within such a short time frame. Such a sentiment is understandable. This method of trading, in their opinion, reduces Forex Trading to something more akin to gambling. They would argue rightfully that entering and exiting a trade should not be like throwing dice. There should be a clear strategy in place. This concept is just much more complicated to implement when engaging in day trading. You are also significantly more exposed to price spikes due to news. It can be a wild ride. Adding an automated system to the mix goes even further down the road in that respect.

Regardless of that, there are those who thrive on it. It’s hard to argue with facts and figures. For some people, Day Trading is Forex trading. They wouldn’t have it any other way. In fact, the first fulltime trader I met was a Day trader. He did well, making consistent profits. It’s not for everyone, but that doesn’t mean it can’t be done profitably. Ultimately, you will have to try it yourself to see how it sits with you. Who knows…you might find that you’re a natural born Day trader.

The term “Forex” is short for Foreign Exchange. Each country in the world generally has its own money or currency. Some countries may share the same currency e.g. the Euro is shared by a number of countries in Europe such as Germany, France and Spain. These currencies have to be valued against each other via some mechanism so when goods or services are bought across borders, proper pricing can be done. This valuation is essentially the Exchange rate between currencies. Exchange rates of currency can vary from day to day. They depend on a wide variety of factors such as Interest rates, Geopolitical climate and many others. Forex trading is a platform through which currencies are bought and sold according to their current rates in order to make profit.

The way it works is simple: A Forex trader purchases some amount of a particular currency which they think will rise in value against the currency they are exchanging it with. After a certain period of time, assuming that the rate rises as expected, they sell or re-exchange the previously-bought currency, making a profit. The same thing can be done with selling. So, Forex Trading is based on speculation. The trader does some analysis of market conditions and, based on that, makes an informed “guess” what direction the Exchange rate will go. The difference between Currency Trading and traditional gambling is simply that, with Forex Trading, proper analysis gives you a lot more information so you are able to better determine market direction. If it feels like throwing dice, you are doing it wrong.

Providing a small example of Forex trading will probably help you to have a clearer idea of how this whole system works. Let’s suppose that the Exchange Rate between the Euro and the Dollar is 1.2614 i.e. 1.2614 Dollars buys 1 Euro. Suppose then that, after your preliminary analysis, you conclude that the Euro is going to rise against Dollar. This basically means that, in a certain amount of time, you will need more dollars to buy the same amount of Euros than at the current rate. Please note that estimating this should be another major result of your analysis. It could be a few minutes, or it could be a few months. In this case we’ll assume it will be days. So, you buy €10 at the rate mentioned above spending $12.614 in total.

After a few days, you find that the Euro has indeed risen up in value and that €1 is now equivalent to US$1.30780. You immediately exchange the €10 for $13.078 and earn a profit of $0.464. This amount may look very small, but imagine if you had invested $10,000 instead of $10, your profit would have been a substantial $464. This example neglects the charges and differences that exist between buy and sell prices. It’s just to illustrate the point. Now imagine this sort of transaction on a grand scale. I mean trillions of dollars traded every day, and you start to understand what the Forex Market is.

Forex trading started in 1970s. It was during this time that most world governments switched over to floating exchange rates for their currencies from fixed rates. Previously these governments would peg the exchange rate of a their currency against another one, such as the US Dollar. Many economists promoted floating exchange rates as a far healthier option for the economy of any country, as it ensured a relatively less deterioration of rates due to any kind of shock or the influence of a foreign business cycle.

At present, the forex market is one of the largest markets in the world with a turn-over of more than $3.2 trillion. There are millions of banks, governments, individual forex traders, corporations and other entities trading currencies around the clock. Because the Forex Market is international, someone somewhere is always trading currencies on the market.

There is always a demand for Forex trading. With the rising trend of globalization, people need foreign currencies now more than ever. The revolution in transportation and communication industry has made it possible for people and companies of different countries do business with each other. Taking this into consideration, we find that the Forex Markets offer ample opportunities for people who are willing to learn about forex trading to profit from, provided they arm themselves with the appropriate information first.

After the roller-coaster that was last week, we are beginning another one. For people who are learning forex trading, or are who are new to the Forex markets, it’s been a pretty harsh environment lately. People like me who proclaim to be part-time traders are also getting a good spanking.

Everyone waited expectantly for the Jobs Report out of the US on Friday. Everyone knew it would be bad, so there were no real surprises at the figure of 651,000. The unemployment rate did jump to 8.1% which was a little higher than most people expected though. I think everyone also expected that such figures could not bode well for the Equity markets. This was the case.

What was a little fuzzy was exactly how the Forex Market, particularly the US Dollar, would react to this news. In the recent past, uncertainty and more negative has tended to favor the US Dollar, what with it’s “Haven” status. However, this has not been 100% reliable lately, as more and more news has come out to show that the US is still very much caught in the recession. It’s always been somewhat counter-intuitive that the Dollar should keep gaining, even as the US economy sinks deeper into the recession.

This was something that could no be ignored on Friday, at least not initially. The Dollar lost substantial ground against pretty much everyone. Unfortunately for those who think the Dollar is losing it’s shine, Forex traders quickly realized the error of their ways and bought the Dollar back. The result: The Forex Markets were back to close to where how they begun the day; most gains against the dollar erased.

So we go into this week expecting quite a bit of news out of Europe. Once again, we expect quite some negativity. Consequently, I think the dollar will be back to it’s old ways again.

Trading in the currency markets can be very lucrative. It can also be an easy way to lose all your money. It all depends on your approach. It doesn’t necessarily require you to go through an extensive research and study program for months. You will, however, need to invest some time and effort to digest all the information required to do well at it. Provided you trade wisely and cautiously, you can become a Forex expert within a year or so, making consistent substantial profits from it. So, where do you start? Well, at the beginning, of course.

Get a decent Internet connection

It may seem silly to have to mention this but, at least in my experience, a slow or dodgy internet connection can cost you…a lot. Part of what has made Forex Trading so accessible to regular folks is availability of high quality free software and market information. There’s a wide array of sources of information, most over the internet, so the importance of the internet is obvious.

The main reason why the quality of the internet connection comes up, aside from speedy delivery of information, is software trade execution. I once entered a trade impulsively – this is a big no-no, and this example underscores why – and, shortly afterwards, realized my mistake. I knew I needed to get out immediately. I attempted to do so but my Wireless internet connection went off at that point. I had lost a substantial amount of money by the time I got my connection back. I blamed karma. Fate was obviously after me. In truth, it was because of my unreliable internet connection. All it takes is one case such as this to destroy your trading Account. If you are going to trade seriously, get a good broadband service.

Research & planning

The second phase of Forex trading has four sub-steps: research, research, research and planning. One just cannot put too much emphasis on the importance of research in Forex trading. Read a book, or three. Get some background on world markets and how they affect each other. Remember that the Forex Market is influenced by a lot of external factors. You will need to understand correlations to maximize your profits. There is some free information available, so you don’t necessarily have to spend money. However, be wary of e-books that try to sell you systems. Get your own knowledge first…unless of course you can try them risk-free.

Along with research, formulate a feasible plan about how you will conduct your trading. If possible, write it down and treat it like a business plan. It should serve as your blueprint for trading. Think about how much you are going to invest. Also write down your short-term and long-term goals and how much loss you can afford. Your strategy will depend on this information so try to be clear and precise.

Find a broker

Your next step is to find a brokerage firm through whom you will buy and sell currencies. You need to be thorough while checking out brokers. Regulation in the Forex Market is no where near the level of other markets. There are still a number of unscrupulous firms out there that might try to defraud you. Try to find a firm that has ties with an international bank or any other financial institution. You should also check if the firm is registered with Commodity Futures Trading Commission, the US government institution that regulates fraudulent trading practices.

Along with the above, you will also want to confirm that the broker is a good fit for you. How good is their software? Do they allow you trade and view charts via website, in case you are unable to get to your own computer? Do they have a mobile application? Make sure you have all these answers. Ultimately, if you are unhappy with one, you can change to another one.

Set up a demo account and trade

All brokers should now offer demo trading accounts. These will allow you trade “fake” money against real-life conditions. Open one and trade, trade, trade! Test out your strategies for at least a few months on a demo account before going live. You will learn a lot about yourself and what you are comfortable with as a trader this way.

Once you have gone through this, you will be ready to start your Forex Trading journey proper.

So, we see it again. This morning, stocks have been rising as the Chinese Government highlights plans for an added Economic Stimulus. This helps to inject some confidence into the market. The risk aversion we have being seeing thus abates a little bit. Investors can come out to play.

After analysis, the offshoot of that is that the dollar loses some steam, at least temporarily. The same goes for the Yen. This loss on the Dollar’s part is furthered increased against the Pound as figures in the UK show that Consumer confidence in February rose from it’s lowest levels in four years. Good times…at least for today.

So, in general terms, a lot of investors talk about long or medium term dollar strength; but as soon as there is the slightest sliver of hope that we might be reaching the bottom of this fall, the dollar is pushed back a little bit. Then some other news comes out that shows that we really aren’t quite there yet; then the dollar gains once more, usually further than it’s previous loss.

It’s no wonder Forex traders still keep betting on the Dollar. We will need a steady succession of good news to end this trend. Today might be the day that starts. More likely, it’s just a breather. More likely, the pain will continue. More likely, dollar strength will continue.

Forex trading can be a very profitable business in today’s world, provided you know what you are doing. Like anything worthwhile, it involves some pain. You will almost certainly lose money in the early stages. In fact, you will continue to have losses even when you are an expert. A successful Forex trader is one for whom the total amount of profit eventually outweighs the amount of loss. At the end of the day, Forex trading is based on speculation, which always involves some amount of risk. The key is to ensure that you control those losses. Below, I have discussed 4 tips to become a successful Forex trader.

Having enough capital

Only a small percentage of Forex Traders are actually successful. The exact figure might be difficult to ascertain, but think along the lines of 1 in 10. The successful ones avoid some mistakes that other Forex traders make and try to follow some basic rules. One very important rule you need to remember is to have enough capital in your account when you start trading. Also, it would be wise not to invest money that you cannot afford to lose. There’s no point risking your life savings, if you have them, in trading Forex. On a smaller scale, don’t risk your rent or grocery money. Remember, at the start the chances of some losses are high. Take that into account when funding your account.

Choosing the appropriate currency pairs

Selecting the appropriate Currency Pair to trade is also crucial for a successful Forex trader. Some currency pairs are more volatile in certain conditions while others are stable. Select a pair that is in line with your trading strategy, long term or short term. If your strategy calls for a short-term investment, then you can try more volatile pairs. However, if you are in it for the long haul, or are uncomfortable with rapid changes in prices, then you can choose a pair that is relatively stable. You have to do some research on Currency pairs and their performances in various climates to help make this choice.

Having entry and exit strategies

Every Forex Trading Operation has basic components: the selected currency pair you wish to trade, the required period, an entry point, and exit point. Your Forex Plan should include sound entry and exit strategies in order to minimize the losses and maximize your return on investment. You could also learn to use stop loss and take profit orders placed to your broker as your exit points.

A stop loss is an excellent exit strategy in case the market moves against you. Stop loss orders are placed to the brokers by the Forex traders to withdraw from the market if the market moves against them and they stand to lose a specific amount of money. A stop loss order protects you from huge losses in case something goes wrong. Similarly, in case of a take profit, you will exit the market after making a certain amount of profit. Both of these involve you as a trader setting a target and sticking with it. Sometimes, when in an actual trade, it might be difficult for you to make the required exit from a trade, even when your target has been met. Emotions could come into play, or you might even suddenly have trouble accessing your Software. Pre-setting Stop losses and take Profit orders allow and even force you to keep to your plan.

Sticking to your own strategy

There are numerous articles, e-books, trading systems available in the market that will claim to make you rich, almost overnight. Most of them sound downright convincing and will tell you that you can make a lot of money using their strategies without taking any risk at all. While a few of them may be genuinely good, most of these strategies will only confuse you initially. So, before you try any out on your Account, do the smart thing: test it on a demo account. Be sure of it. Then you can trade with it. Remember, there is no simple short-cut to becoming a successful Forex trader.

I’ve heard it so many times over the past months…”Don’t fight the trend…The dollar rally will continue”, “The dollar will continue to be a safe haven for some time to come”. Those comments are still valid today. The Dollar just keeps getting stronger and stronger. For a minute last week, I thought that trend was reversing. I mean how can you continue to justify the currency’s strength when there are so many problems with the US economy? The Yen was in a similar situation; its status as a haven is being threatened terminated. The fundamentals don’t really provide support for it.

However, with the Dow dropping below 7000 yesterday, the Yen and the Dollar gained strength again. Once again the discussions have begun. Is anyone willing to make a call on whether this is a bottom for the stock markets? It should be close (but then again, people have been saying that for some time now).

In any case, I am bullish on the US Dollar right now. It certainly will keep its strength longer the Yen in the current climate. If the Equity markets start to rise, then investors will be willing to take their money out of safety. That might take some shine off the dollar. We will see what the rest of 2009 holds.

Happy Trading

They say there is a shortcut to everything, provided you are ready to pay for it. This is true about Forex trading also; well sort of. If you are a novice trader, you may find Forex trading just a little bit too complex, with so many things happening at the same time. So much so that it is really difficult to follow everything closely. It is not that the Forex trading is inherently hard to understand, but it takes time and patience to comprehend its multiple aspects.

What if you have a very short supply of both? Does that automatically mean your Forex Trading career should end before it beings? Isn’t there any shortcut available to Forex trading so that you don’t need to go through the painful research and try to figure out trends every time you would like to trade, at least when you first start? You may find yourself asking all these questions. Also, it would be handy if you could tap into the market at every available opportunity. However there are times when moves may happen when you are not online. You would therefore be completely unaware of them.

Automatic Forex trading signals provide a solution of sorts to the problems mentioned above. You can receive automatic Forex trading signals either via software which you have to install on your computer, or via membership of a website that provides automatic trading signal services. The con side is that these are usually paid services. In case of software, it could a one-time payment. In this case, the system is yours to use as you please. However, in the case of enrolling to an automatic Forex trading signal service, you need to pay monthly membership fees, which usually vary between $50 and $500, generally.

The way these signals work is very simple. Your software or your signal-providing agency will do all the necessary research and signal you when to buy or sell particular currency pairs. The idea here is that it eliminates all research, speculation and strategizing that you need to do. Simply open a Forex account, get an automated Forex trading signal service and buy or sell according to the trading signals sent by the automatic service.

The mathematicians, software developers and experienced Forex traders usually work in collaboration in order to build such systems. Therefore one would expect that they would work well. However, like any product in the world, there are some services or software that are of good quality and some are really bad. Reputable sources would be a good place to start.

You will rightfully wonder how come, if these services are as successful as their owners claim, all Forex traders don’t use them. Experienced Forex traders usually already have a time-tested method, which they follow and have complete faith into. Therefore, they would not like to change it for anything as these strategies have worked out for them for years. Also, being very experienced, they do not find Forex marketing very complicated any more and feel no need to hand the control over to someone else, or even a machine for that matter. Newer traders are likely to be confused about whether it is right to trust an automatic service. The answer is that you don’t necessarily have to trust them completely.

People can have various reasons not to try out these methods. Using a Signal Service can be very useful to learn about the markets. A good way to use them is to ensure that, for every signal you get, you understand the reasons why. You can try a service for a short time, and use them to learn about Trading while you are actually trading yourself. If you think that you want to start trading but are feeling low on confidence, you can try out an automatic Forex trading signal service. If nothing, it will enhance your knowledge about how to conduct your trades.