Basics For Every Forex Trading Beginner

There is a lot of information out there for Forex currency trading beginner. If you have decided that your ultimate goal is to become an expert foreign exchange trader, you should take a look at some must-have information. The first thing that should concern you is to find out what exactly Forex is all about.

The Forex market is one of the biggest financial investment markets in the world. Many think that the stock market is huge, but it can not quite measure up the size of the Forex market. Even if we add the futures market to the stock market, the Forex market would still have a bigger amount of money being traded every day.

In the past, only people with large capital are allowed to trade in the Forex market. Thanks to the presence of online trading companies, average investors can also have their share in this exciting field today. That being said, you still need to be able to afford the risk of financial loss.

When doing Forex Trading, people are actually buying and selling different currencies in the world. You buy one currency while sell another. As such, currency trading always involves pairs, and quotes of currencies also come in one currency against another. The major players include the U.S. dollar and the Canadian dollar (USD/CAD), the Euro and the U.S. dollar (EUR/USD), the U.S. dollar and the yen (USD/JPY) and the Australian dollar and the U.S. dollar (AUD/USD).

There are many advantages to trading in the Forex market. The transactions are fast because everything is electronic. You also are assured that there are often people who would want to trade with you. This is simply because there are so many people who are trading everyday and every hour of the day. You can buy and sell at anytime whenever you want to.

One other attractive aspect of currency trading is leverage. Your leverage capabilities are simply huge with a nearly unbelievable ratio of 50:1. With very minimal initial cash you can already manage a large amount of currency. This is probably the main reason why the market is quite attractive for those who want to increase their earnings impressively.

However, you should expect to get rich instantly in this market. People can lose too in currency trading. Those who do are often those who act impulsively with the hopes of getting rich instantaneously. If you do not take the time to learn the inner wheels of Forex trading and the technical aspects of leveraging, then you could lose everything you have put into currency trading.

As a Forex currency trading beginner, the best way to make sure that you have a rewarding and fulfilling experience with currency trading is to prepare yourself before diving into actual trading. If you are a small-time online investor, you can pick an online company that can help you learn. Many of them will allow you to first practice trading with imaginary currencies without any substantial cost or loss to you. Position yourself as a beginner and learn from the seasoned player, you will have a good chance of becoming an expert in this field.

Source: Jane MacRae

Forex Market: Currency Pairs and Forex Quotes

If you are new to the forex market, you might find forex quotes confusing. Do not allow yourself to be overwhelmed with forex quotes. In fact, reading forex quotes can be quite easy.

In reading forex quotes or currency pairs, there are two important things that you must keep in mind. First is that the currency being quoted first is what we refer to as the base currency. Second is that the value of base currency always equals to 1.

The centrepiece or focus of the forex market is the US Dollar. It is also often quoted as the base currency for a lot of pairs. A currency pair that has the US Dollar as the base currency is what we call “major”. Examples of major currency pairs are USD/JPY, USD/CAD, and USD/CHF. In major currency pairs, quoted currencies are expressed as the US Dollar, specifically, one (1) US Dollar for every, or a fraction of the, unit of the second currency quoted in the pair.

As an example, let us take the US Dollar and the Swiss Franc. In the currency pair USD/CHF, the base currency is the US Dollar. In the quote USD/CHF = 1.0806, one unit of the US Dollar is equivalent to 1.0806 units of Swiss Francs.

If a currency goes up, you must take note of the base currency. In the aforementioned pair, the US Dollar is the base currency. If the quote goes up, it simply means the value of the US Dollar has increased compared with the value of the Swiss Franc. If the quote goes down, then one can easily conclude that the value of the US Dollar has depreciated to a certain degree.

There are cases when the US Dollar is not the base currency. We often see the US Dollar as the quoted currency when it is paired with the Australian Dollar (AUD), British Pound (GBP), and Euro (EUR). Let us take the AUD/USD currency pair quoted at 0.8044. This shows that one unit of Australian Dollar is equivalent to 0.8044 or less than one unit of US Dollar. One can conclude that the Australian Dollar is weaker than the US Dollar. If the quote goes up, then it means that the US Dollar has weakened against the Australian Dollar.

Currency pairs do not always involve the US Dollar. These currency pairs are referred to as cross currencies. Examples of which are EUR/AUD, EUR/JPY, CHF/JPY, and EUR/SGD. Let us take the currency EUR/SGD pair quoted at 2.0373. This shows that one unit of Euro is equivalent to more than two units of Singapore Dollar or 2.0373 Singapore dollars.

Source: Bart Icles

Forex Market Update 18-11-12

Market Comments:

The USD and JPY have swept stronger against the market in today’s European session. And for once, the USD move has come unaided by a concomitant move in equities to the downside. This is an interesting divergence, to say the least. We wonder if yesterday’s decisive move lower in yields, which took the US 2-year, for example, into new territory is serving as a game-changer across markets. After all, if bond buyers are willing to chase these pathetic yields, it strongly suggests more perceived weakness ahead than rallying asset prices would otherwise suggest. Of course, as we have said ad nauseam of late, the rally in asset prices is a side effect of the “liquidity is king” theme that has been playing for some time now. Alternatively, the USD bears might tell us that the USD move was just a bit of position adjustment triggered by Obama calling for China to allow the yuan to appreciate (President Hu, for his part, didn’t even acknowledge what Obama said about currency appreciation…), as the consensus is that a Chinese move on the yuan will be largely bullish for the USD relative to the Euro. We prefer to prick up our ears here and listen very closely to the market’s pulse, since this move looks interesting. The slavish correlation of the USD with risk appetite has been the be all and end all of currency market moves of late, so any divergence is certainly worth noting.

The moves in JPY crosses have followed the simple logic of compressed interest rate spreads, and EURJPY is now less than a figure from the pivotal 200-day moving average just below 132.00. A close below that level could get something interesting started across the board for non-USD JPY crosses (non-USD since USD and JPY strength tend to be more or less positively correlated) USDJPY has actually bounced a bit on the overall USD strength.

Technically speaking
The USD managed to cross to the strong side of the weekly pivot in AUDUSD (0.9297), USDCAD (1.0568), EURUSD (1.4925) and USDCHF (1.0120), all of which are levels worth watching intraday. A sharp move back through these levels suggests we’re just seeing some churning in the range for now. The argument that this isn’t just a sharp move within the range is enhanced if we get a close through 1.4820 in EURUSD in the sessions ahead, and for example, below 0.9210 in AUDUSD.

Inflation data
Today’s UK inflation data was slightly higher than expected, but not enough to serve as a catalyst. US PPI data served up a rather shocking -0.6% drop for the core ex Food and Energy index on month-on-month comparisons and a mere +0.7% YoY, which is the lowest reading since the core PPI dipped sharply in 2002- 03. This is not necessarily a USD-negative development if the idea rubs off that low US inflation could mean lower inflation elsewhere and that too much tightening is priced into the market for other central banks.

Looking ahead
The Industrial Production and Capacity Utilization data out in a bit are a likely to show continued activity pick-up in the US manufacturing sector, which is in the midst of an inventory rebuilding cycle. Tomorrow, GBP is in focus again with the Bank of England minutes. EURGBP is having a try through its 200-day moving average today. GBP seems to be enjoying the low rates environment here much as the JPY is, and the market will be looking for more clues concerning the MPC’s feelings about any further quantitative easing moves. Also up tomorrow we have Canadian and US CPI data. Oil prices refuse to break out of the rather high range of late, and the eventual implications for year-on-year inflation comparisons are obvious, since oil was trading below 40 dollars around the beginning of the year. Clearly, after yesterday’s Bernanke rhetoric, however, the Fed sees little to worry about on the inflation front.

Chart: AUDUSD, again, again
AUDUSD has teased with the prospect of a turnaround on a couple of occasions lately, and we wonder if today’s move is just another of these teases that eventually yields to another leg up or whether we are looking at a genuine turnaround and larger consolidation for the pair. The latter scenario is preferred as long as we close below this week’s pivot just below 0.9300 and is enhanced with a close through the recent low at 0.9210 in coming sessions. The monster trendline further below lies in wait as the next step. The relatively dovish RBA minutes overnight have brought the interest rate spreads tighter vs. the USD and suggest that new highs in AUDUSD aren’t warranted here. Note the divergence in the momentum for the daily stochastics as well.

FX Market Update 4-11-09

The Australian dollar weakened further in the European session today, as did most currencies versus both the greenback and the Yen on further weakness in asset markets in Europe. Besides our comments earlier on the RBA’s rate decision (with the AUD weakening a least partially due to the disappointed minority looking for 50 bps), it’s perhaps important to also note the RBA’s mention of the currency’s strong levels as having an effect on the inflation outlook, meaning that Aussie strength in and of itself is an important factor in assessing monetary policy. (“The board noted that the rise in the exchange rate is likely to constrain output in the tradeables sector and dampen price pressures.”) These comments lowered the forward view somewhat on the trajectory for further rate hikes. If equities continue to trade sideways to down, we could see further pressure on the AUD, which has been overdue for a reasonable correction.

GBP: steady as she goes
RBS had to be thrown another 25.5 billion pounds of state funds to keep it a going concern, making it now the world’s most expensive bailout, with Citigroup moving to a second place. Someone made the appropriate joke about the likes of RBS and Citigroup as not only too big to fail, but “too big to exist”. The pound had been sharply weaker yesterday and into today on the latest bailout news, but has come storming back as the theme of correlation with the other lower yielders seems to be taking the upper hand at the moment. EURGBP reversed sharply lower after a new four-day high today, though the greenback is maintaining the upper hand, with GBPUSD down testing the 1.6250 support level. The market is likely waiting to see the BoE’s position on QE measures this Thursday before moving all of its chips onto the table.

Looking ahead
There is little of note on tap for the US session, with only weekly API crude oil inventories and the weekly confidence (or lack thereof) number expected to rise a bit from last week’s 15-week low. The Asian session is a bit more interesting, with the Retail Sales number and the Services survey on tap. One wonders if the USD can simply continue to power ahead with the FOMC up for tomorrow night. It is interesting to note that the EURUSD sell-off was halted right at the 55-day moving average at around 1.4625 today. It hasn’t closed convincingly below that level since April. The ISM non-manufacturing survey and US ADP payrolls report are also on tap for tomorrow, so the market may show little further directional conviction today barring unforeseen news.

Chart: GBPUSD
GBPUSD was down testing close to the two-week+ low at 1.6250 today. This area also coincides with the 21- and 55-day moving averages and serves as the trigger for a larger downside view if a break holds. It is always interesting when the market is trading close to key levels ahead of big events, like FOMC tomorrow and BoE Thursday (just to name the two biggies) If support survives for now, the focus reverts to perhaps 1.6500 as an upside swing level and then the 1.6700 area.

Forex Market Update 3-11-09

Market Comments:

This week has already picked up where last week left off, with yet another direction change in most of the USD crosses in Asian and European trading, though so far, the USD sell-off has been somewhat weaker than Friday’s USD rally. Clearly, the market is on tenterhooks after the dramatic expansion in volatility late last week and wondering whether this was a calendar month phenomenon or the real deal as we go into a new month and a week packed with event risks. 

JPY volatility
As if volatility wasn’t bad enough, JPY crosses swooned due to some bizarre situation in Tokyo with the ZARJPY cross and a misquote that triggered all manner of stop-losses across the board – even in other JPY crosses, so the sell-off and comeback that appears on the charts may be an artificial development from a technical perspective. It was interesting to note, nonetheless, that EURJPY once again found support right at its 200-day moving average, as the overnight action underlines that level as critical for the longer term outlook. JPY crosses are likely to remain the high beta crosses this week with all of the economic data and central bank’s decisions weighing on both risk appetite and interest rates as cross-market volatility is clearly heating up here.

Tonight’s RBA
AUDUSD slipped to a new low overnight in the Asian session, but that low couldn’t hold after strong house price data  has the market looking for that extra bit of hawkishness in tonight’s (Asian Tuesday) RBA rate announcement. Rate differentials between AUD and the USD (and more other currencies, for that matter) are still well off recent highs, so whatever the RBA has planned, it will need to reinvigorate spread widening for the AUD to regain the upper hand across the board. Risk appetite will also need to make a comeback for the AUD rally to get back on track. As we suggested last week, the AUDUSD rally may be facing structural threats from a technical perspective. Regardless of that latter fact, if the minority of analysts looking for a 50-bp. hike tonight are correct and risk appetite snaps back, we could see a rush back to 0.9300 in a hurry.  This is a busy week for data out of Australia as well, with the AiG services survey and Sep. Retail Sales set for release in Australia’s Wednesday session.

GBP fadeaway
GBP fell out of bed to start the week after its rather odd bout of overexuberance late last week. The poor growth data from Q3 suggests the market may be looking for the waffling BoE to lean more on the side of QE than it expected before the latest batch of numbers. Still, home price data suggests that the easy money policy continues to prop up asset prices and the latest manufacturing PMI out today was quite strong. Industrial and Manufacturing Production data are also out on Thursday just ahead of the BoE decision. Regardless of the direction in risk appetite this week, we suspect that the USD will outpace GBP unless the BoE comes out with a more hawkish message on planned exit from QE than we or the consensus expect. Tactically speaking, the line of support around 1.6350 is interesting for today’s US session, and the two-week low at 1.6250 is the bigger potential downside trigger.

Looking Ahead
The US ISM manufacturing data is not likely to surprise to the downside today after two of the three regional surveys surprised strongly to the upside in October. The market has bigger fish to fry than the ISM anyway this week, and many are writing off any uptick in the manufacturing side of the US economy as part of the inventory restocking cycle, especially in autos after the Cash for Clunkers depleted inventories. Remember once again that we have the RBA up tonight, the Fed up on Wednesday, and the ECB and BoE on Thursday. This is all capped off with the US employment report Friday. Certainly a week for treading carefully!

Chart: GBPCHF
GBP found important resistance today it seems, as evidenced in a cross like GBPCHF, where the two-wave correction appears complete after an attempt at the 55-day moving average. The sell-off back through the old high suggests that further weakness toward the rising line of consolidation is the path of least resistance for the moment.

FX Market Update 20-10-09

MAJOR HEADLINES – PREVIOUS SESSION

• New Zealand Sep. Performance of Services Index rose to 53.2 vs. 51.3 in Aug.
• UK Oct. Rightmove House Prices rose 0.2% YoY vs. -1.5% in Sep.
• Japan Sep. Nationwide Department Store Sales fell -7.7% YoY vs. -8.8% in Aug.
• Canada Aug. International Securities Transactions rose 5.08B vs. 2.5B expected and 0.37B in Jul.

THEMES TO WATCH – UPCOMING SESSION

(All times GMT)

• US Fed’s Bernanke to Speak (1500)
• US Oct. NAHB Housing Market Index (1700)
• US Fed’s Kohn to Speak (2030)
• Australia RBA to release October Meeting Minutes (0030)
• Japan BoJ Deputy Governor Nishimura to Speak (0130)

Market Comments:

The USD attempted to extend its comeback in early Asian hours by having a look below the key short-term level at 1.4850 in EURUSD, but as is often the case with breaks in the Asian timezone, the move failed to hold and the USD was pushed back close to recent lows, largely because risk appetite was resurgent once again, but also as a hawkish appearance from the RBA’s Lowe (“The Australia economy has turned out to be quite a lot stronger than we thought”, “It’s entirely appropriate we go back to a more normal setting in monetary policy.” “[Australia] will have a higher average exchange rate”) helped to underline the theme of widening interest rate expectations punishing the USD and the JPY vs. the higher yielders. As for USDJPY, it has so far survived a test of the critical support around 90.40

UK and US housing data
The pound failed to appreciate despite Rightmove’s Sep. report indicating that housing prices showed the first year on year gain since early 2008. GBP has taken on the characteristics of an alternative to the weak USD due to its similar situation and could remain on the weaker side of the range as long as risk appetite remains strong. Focus shifts to the US housing market today and tomorrow, as the US reports the latest NAHB survey today and tomorrow reports September Housing Starts and Building Permits. The US price changes are barely rising on a month to month basis so far, by far lagging the UK market due to the tremendous supply overhang in the US. One note of interest on US housing – the first time homebuyer tax credit is set to expire December 1, but congress is apparently looking to not only extend this credit, but to make it available to all home buyers . This could pull forward more housing demand (reports are that first time home buyers are an unusually high percentage of home buyers due to the current heavy incentive, so housing demand will plummet for a few months if Congress doesn’t try to keep the party going), though one wonders how much of this demand would cannibalize future demand – much like almost everything the US Fed, Obama administration, and Congress have attempted over the last year.

Brewing bubble
A story from Bloomberg today discusses Asian countries’ (ex China) struggle to fight the sharp appreciation of their currencies vs. the USD. The likes of Korea, Taiwan and the Philipines are taking various measures to threaten intervention or are already trying to clamp down on increasing speculation in USD weakening vs. their currencies. Besides outright speculative USD selling, it is increasingly common to see corporate borrowing in dollars in anticipation that they will be able to pay back the loans at a lower rate than they borrowed at (and not only due to the low interest rate). All of this is aggravating the weak US fundamentals and highlights how the speculative world views the weaker greenback as a sure thing. It also, however, increases the risks of periodic and nasty reversals as the carry trade and the global move in risk appetite in general are increasingly taking on the characteristics of a new bubble. The bubble can inflate to any level imaginable – like AUDUSD rising to the much bandied about parity level -  or even 1.10 – as long as nothing sufficiently disturbing materializes to alter perceptions and market participants continue to chase the trend. But the psychology and positioning excesses of a bubble increasingly creates the risk for an ugly unwind similar to last year’s chaotic deleveraging (though a black swan of that magnitude is unlikely to swoop onto the scene considering the central bank activism that The Last Time generated.)  For now, the action appears very stretched, but things can become grotesquely stretched as long as a bubble is inflating.

Looking ahead
Today is a light day on the US calendar as usual for a Monday, Bernanke is out speaking in California on the Asia and the financial crisis, and we do see the release of the NAHB Housing Market Index later today. This is the best forward indicator of US housing demand.

As we wrote on Friday about the rest of this week’s calendar:
This week sees a bit of central bank activity, with the Bank of Canada up on Tuesday (no change to 0.25% rate expected and will be interesting to see what the bank has to say about the level of the currency and how much it figures into the equation) and the Riksbank on Thursday. The Riksbank is an interesting case, with its very low 0.25% rate and a relatively dovish central bank – but the market has priced in almost 150 bps of tightening by the bank for the year forward. With EURSEK trading close to the key 10.37 area resistance as we end the week, we could get a bit of volatility from the bank’s guidance on policy. Finally, the BoE minutes of the most recent meeting will be published on Wednesday. Mervyn King is to speak on Tuesday.

Other key data points: US PPI, Housing Starts and Building Permits on Tuesday, Canada Retail Sales on Thursday, and Germany’s important IFO survey on Friday.

Today’s Chart: AUDUSD
AUDUSD has churned back higher after the latest RBA comments, but stochastics suggest that the action is becoming a bit stretched and the pair could be in for a bit of ranging and consolidation here in the short term in order to digest the latest move. The caveat in a bubbly market is that mean reversion is never guaranteed.

FX Market Update 15-10-09

THEMES TO WATCH – UPCOMING SESSION

(All times GMT)

EU ECB Publishes Oct. Monthly Report (0800)

EU Euro-zone CPI (0900)

Swiss ZEW Expectations Survey (0900)

EU ECB’s Trichet to speak (1125)

CA Manufacturing Sales (1230)

US CPI (1230)

US Empire Manufacturing Index (1230)

US Initial Jobless Claims (1230)

US Philadelphia Fed Index (1400)

Market Comments:

While currency markets were a tad more hesitant in pushing the” risk on” theme during the NY session, Wall St embraced it and we saw the DJIA climb above the 10,000 mark for the first time since October 2008. Cycle highs were posted in EURUSD and AUDUSD but lower US Treasuries helped put a base under USDJPY after the FOMC minutes were published.

The minutes showed that committee members were a touch more restrained on economic recovery, sensing that one was under way but likely to be “quite restrained”. There was some discussion on the MBS purchase program with news that some members were open to expanding the program seeing early dollar selling but with the statement noting that some suggested tapering quickly and completing the purchases by year-end. Back to square one. On balance, the mood was that the Fed would stick to it “low rates for an extended period” theme.

Elsewhere, the US data came in strong: headline retail sales were down 1.5% m/m as the “cash for clunkers” program ended but ex-autos sales were a surprisingly strong +0.5% m/m. Q3 consumer spending gained 3% while the business inventory to sales ratio dipped to an 11-month low. UK data was again better than expected and momentum appears to be building to a surprise stop-loss-hunting GBP rally. Euro-zone data disappointed however with industrial production up only 0.9% versus 1.2% expected but this was easily forgotten in the EUR-buying frenzy within the weak dollar environment.

The Asian session took the lead from the antipodean countries with higher NZ CPI data the first trigger. Inflation rose 1.3% q/q and 1.7% y/y in the third quarter, driven by higher food prices, fuel and local authority rates. The surprise, combined with the first expansion in NZ manufacturing activity for the first time in 17 months in September, will bolster the case for the RBNZ to drop its easing bias at the next policy meeting and this helped the NZD higher to neat 15-month highs.

Then it was the turn of the AUD to follow suit after RBA governor Stevens came out with a number of hawkish comments in a speech on “The Conduct of Monetary Policy in Crisis and Recovery”. He said that the central bank could not afford to be too timid in raising interest rates especially after the expected downside risks to the economy had failed to materialize. He thought it was prudent to move away from the emergency “low” rate regime to a more neutral one, though was not specific about what level that might be. AUD yields surged even higher after the comments and AUD was able to post a new 14-month high above 0.92.

The moves in the antipodean currencies filtered down to the other majors to a lesser degree, though EUR edged ever closer to the psychological 1.50 mark and GBP pulled through resistance at 1.6025-30.

Today sees a few interesting data points to consider in the US with the first two of the major regional manufacturing surveys on tap (empire manufacturing and Philadelphia Fed survey) along with the weekly jobless claims numbers, which have started to indicate not so much doom-and-gloom on the jobs front, though still at elevated levels. Surveys suggest this week should be broadly similar to last week at 520k. CPI numbers also on the radar and might be interesting given some of the surprises we have seen around the globe of late.

Forex Market Update 14-10-09

Pound disappearing act continues…
The pound reached new lows for the cycle vs. the Euro after the inflation data today failed to trigger any notion that the BoE would begin to fret the implications of the weak pound and its effect on inflation. It’s more than remarkable to see such low inflation readings considering the pounds remarkable fall of late. EURGBP was trading at 0.8000 a year ago – meaning the pound has weakened more than 15% in the last year, and yet the RPI retail inflation number is running negative on year-on-year comparisons? This kind of release really challenges proponents of the inflationist view, though some would argue that the 1.7% Core YoY CPI reading is still somewhat elevated relative to the average for the last 10 years. Considering the collapse of the currency, however, this is also a very mild reading. In any case, as long as risk appetite is otherwise healthy, this is a very pound-negative development as it encourages the view that the BoE can merrily keep its rates low and hope that a weak currency will help prevent the risk of deflation and revive investment in the country’s manufacturing and asset base.

UK Housing
Certainly the main asset market in the UK – housing – is showing strong signs of a recovery. The best and most leading housing related survey, the RICS house price balance – shows increasing percentages of respondents reporting price rises and the likes of the DCLG survey will likely turn outright positive for year on year comparisons in the months to come.

Compared to US housing….
In the US, meanwhile, the most popular S&P/CaseShiller survey’s most recent data point showed year on year comparisons still off more than -13%, and month on month readings that are only just beginning to stabilize just before an important tax incentive is about to expire at the end of November. Increasingly, however, it appears that politicians want to extend the tax credit beyond the original deadline. The bigger question for the housing market arrives somewhat later in next March, when the Fed will supposedly step back from its $1.25 trillion mortgage buying program. Housing will certainly not be the source of any recovery in end demand as the spectrum of likely outcomes for the US housing market run from stabilization at best, to large further declines at worst, as housing prices have some way to fall before they undershoot the longer term price trends.

ZEW – continued divergence in expectations vs. reality
The slightly lower than expected and lower than last month ZEW Survey of Expectations out of Germany grabbed the headlines today, but is not a particularly significant development as this fickle survey has shown little ability to predict much of anything in past cycles, even if it did begin surging higher in the months ahead of the actual equity market bottom in March. As we’ve indicated before, the most interesting phenomenon of note is the astounding gap between expectations
 and the “present situation” ZEW survey, which improved very slightly to -72.2 from -74 in August. This survey is normally a fairly consistent coincident indicator with, for example, the DAX index, and yet it has only dead cat bounced in recent months relative to the exuberant recovery in equities. Hmmm……in a recovery, sentiment about the present situation needs to be positive.

Intel earnings in focus
There are no real event risks in today’s economic calendar as the focus will likely mostly center on earnings guidance from Intel today, which reports after the US close. This is a bellwether kind of  company, so actual results in addition to its forward guidance will be an important test for the market – even FX – at a time of day that is not normally known for much volatility – so we should stay on our toes as the report could have sentiment implications for the next 24 hours, especially if the guidance strays into pessimistic territory, considering that the averages are perched close to the highs for the cycle.

Chart: AUDUSD
Interesting to note the reversal today after the pair pushed to strong new highs on no news in particular. The last phase of appreciation has been steeper than previous waves of action in this uptrend and the rally has outrun the support from interest rate spreads widening in favor of the Aussie. If we have an ugly day on the equity markets today or tomorrow, this pair could be in for a steep consolidation lower.

Forex Market Update 9-10-09

The much better than expected labor report from Australia made the RBA look smart after having just done a surprise rate hike. The picture seems to be rosy in Australia, where they actually worry about a bubble in the housing market (must be the only place in the world by now). Critics are saying that Australia is just a sub function of Chinese growth, but so far that has served the Australians well. The level of economic activity has clearly not only stabilized but risen considerably since March. It looks like AUD is a “buy on dips” — certainly as long as the stock market continues higher and the risk appetite is strong. Who knows, if/when S&P500 is approaching the big-picture 50% Fibonacci retracement around 1121, the AUDUSD might be trading at parity?

Another intersting development today and yesterday is the news that the Latvian policy makers are considering (already decided) that lenders in the Latvian mortgage market can only collect collateral worth the ACTUAL value of the house that the mortgage was written on. This is a very dramatic change from the prior policy (law) where home owners were obliged to pay the whole value of the ORIGINAL loan. With a housing market down by around 70%, huge writedowns are waiting for particularly Swedish banks, where the entire shareholder equity is now at stake. It more and more looks like there actually was a reason for the Swedish FinMin hysteria last week. A bail-out is in the cards and both SEB and Swedbank are under pressure. The same goes for SEK. Look for a break of 10.37 in EURSEK today or tomorrow. Another interesting play would be NOKSEK, where the Latvian showdown apparently was feared/sensed in the past 12 trading days. Short-term SEK weakness could also be justified on the back of the disappointing Industrial New Orders and Production earlier today.

Another development these days center stage is the continuous rally in EURUSD (or rather weakness in USD). Rumors of the dismissal of the USD as a reserve currency and Asian central bank buying of gold and EUR are everywhere these days – even the ones that are promtly denied. That might be the forex zeitgeist and it more and more looks like these kinds of expectations and rumor-mongering could become self-fulfilling profecies. EURUSD faces tough resistance around 1.4844 (Sep high) and 1.4865 (technical level from a year ago – see above graph).

We expect the major USD support levels to be tested this week.

Forex Market Update 7-10-09

Market Comments:

RBA surprise hike
The RBA surprised markets with a move overnight, becoming the first of the G-20 banks to hike interest rates. And even thought the market was increasingly leaning toward a hike, there was more than enough surprise to pull AUD significantly higher vs. the broader market. This and renewed risk appetite brought AUDUSD within shouting distance of 0.8900, a new high since late last summer. The 2-year interest rate differentials for the US and Australia are still a tad below the highest level from September, however, when AUDUSD was trading a bit lower, so the direction for AUDUSD after the immediate kneejerk here will still depend on a further widening of the differential and continued robust risk appetite. In other words, it’s all priced in at the moment.
The RBA explained its decision as a result of an economy performing more strongly than expected and an inflation outlook in which “inflation will not fall as far as earlier thought.” The RBA also mentioned that Chinese growth has been very strong. On the strength in the Aussie currency, the RBA simply noted that the currency was strong and that its strength was “considered”. Lack of concern on the currency was also a green light for the Aussie bulls. Barring any exogenous shocks, the RBA is likely to hike at its next two meetings as well.

Sterling hits the skids
The pound hit the skids once again on awful production data, particularly concerning since the very weak pound (which is scraping very long term lows against an evenly weighted basket of the remainder of the G-10 currencies). GBP will continue to trade like a carry trade funding currency, it seems and the rejection at 1.6000 looked interesting in GBPUSD, with the recent 1.5770 low for the cycle the last local line of support. In EURGBP, the 0.9300 are is the key local resistance.

Anti-dollar conspiracy?
The weak USD action overnight in Asia was aggravated by a story in the UK’s Independent, which described a plot by Gulf Arab states, China and others to move oil pricing away from the dollar and possibly to a basket of currencies. The timing of the article with the RBA’s actions and gold stretching higher gave it more impact, even if the Saudi central bank governor later emerged to flat out deny the allegations in the article. Really, such a “plot” is necessary and would be better for the long run anyway, as it would help to iron out global imbalances caused by USD pegging. And even if the story was true, it discussed a timeline for such a move stretching to 2018.

Latvia and SEK (again)
Interesting for the Swedish krone at the moment are the goings on in Latvia, which may be moving toward a meltdown according to sources and some of their latest actions, as they refuse to go all out to introduce austerity in the state’s budget. The broader liquidity and risk picture suggests that the international community might let this one go now, since the contagion risk is lower now that so many believe things are headed the right way. This will inflict significant costs for Sweden, however, and explains why the SEK rally has derailed in recent days. Stay tuned there as the time line may be rather compressed and EURSEK is closing in on an interesting resistance area at 10.37.

Looking ahead
Watch the Canada Ivey PMI out shortly to see if CAD can also break to new highs vs. the USD. CAD is a bit like a weaker flavor of the carry trade. Canada has the commodity credentials of the Aussie or the like, but not the hawkish central bank expectations, so it has been slower to respond to the risk rally. Also watch out for tonight’s employment report from Australia – did the RBA get a sneak peek? Would certainly be interesting contrast if the report is as weak as it was last month.

Chart: AUDUSD
The performance in AUDUSD looks very strong, but the expanding triangle formation we are seeing is theoretically a bearish one – though we would certainly wait for a break of the lower bound of the formation for confirmation.

Forex Trading: AUD/USD Hits Technical Level And Retreats

The AUD/USD pair has appreciated with relative ease from the beginning of the 2009. It has now reached an obvious critical technical level at the 50% retracement from the all time highs last July to the October 2008 lows and has sold off some.

As the data remains relatively positive from Australia and commodity prices continue to appreciate off their recent lows, there is every indication that the pair could continue higher as young commodity exporting countries seem to be on the move.

We will watch the 21 day moving average to provide short-term support with the 38.2% retracement below that if the pair retreats further.

Source: Greg Michalowski

Stock,CFD, Fx and Forex Options – Data and Trade Recs 11-05-09

Calendar

What’s going on?

• The US Unemployment Rate rose to 8.9% on Friday – as expected. NFP losses were slightly lower than expected as indicated by the ADP on Wednesday.
• Still, a lot of talk about ‘green shots’, but tech stocks are showing a marked weakness vs. S&P500 in the past two trading days. Watch out for stocks if Nasdaq breaks the 1377 level. One positive though: The Itraxx Europe CDS Index is much lower on Friday and our own CDS Index agrees.
• The rally in copper stopped for now, but commodities in general are through the roof, especially Crude Oil. Is copper still leading?
• EURUSD broke forcefully higher on Friday, now trading at +1.36.

FX

Equities

Futures

FX Options

Forex Trading Must-Knows for Beginners

The foreign exchange (forex) market is undoubtedly one of the most liquid financial markets in the world with a daily volume of more than 3 million U.S. dollars. Because of this very liquid nature of the forex market, a lot of people from all walks of life are being enticed to try their luck in forex trading, hoping to double, triple, and – if really lucky – exponentially grow their money through it. For some people, it can be a very lucrative venture. For majority, though, if not done correctly and wisely, it can result to losses.Since forex trading is speculative in nature, that is, a lot of its activities are largely based on guided speculations, there is only a low percentage of market activity that represent companies’ and governments’ fundamental currency conversion needs. This is the reason why if you are intending to do forex trading, you yourself should know everything about it.

To avoid the losses, you should be able to know all that you need to know about forex trading. The best approach to this is to ask for an experienced forex trader’s help in understanding the different areas that you need to know about the forex market, from the most basic down to the most complicated strategies that you can be able to employ when you finally venture out into forex trading yourself.

If you are a beginner in the forex trading world, here are some of the things that you definitely need to know about:

1. A pip (percentage in point) is the smallest price increment in a currency involved in the forex trading world. They are calculated per currency pair. For example, when you are trading US dollars/Swiss Francs with US dollars as the base currency, whenever it rises or falls, there will be a movement on pip values.

2. The major currencies being traded online are AUD, GBP, CHF, USD, JPY, EUR, and the CAD. Other currencies are considered minor currencies.

3. The first currency in the pair is called the base currency while the quote currency is the second currency pair. For example, in trading CAD/USD, CAD is the base currency while USD is the quote currency.

4. Transaction costs are often higher when trading cross currency. Cross currency is a pair that does not involve the USD. It requires more skills in knowledge when trading cross currency since it is more complicated.

These are basically the basics in forex trading. Of course, you should not be limiting your knowledge to these basics since the forex trading world is full of twists and turns that would require knowing different techniques and strategies.

Stock,CFD, Fx and Forex Options – Data and Trades

Calendar

What’s going on?

• The stress test on US banks was released yesterday and nothing much new information was revealed. BofA need $34 bln., Wells Fargo $13.7 bln and CitiGroup $5.5 bln. The major issue is still whether the assumptions underlying the stress test regarding the worst case scenario is realistic.
• ECB cut interest rates to 1% and announced that it wants to buy debt and bunds were heading lower on this. BoE announced that it will have another go of buying debt despite that the prior attempt did not have any long lasting effect on the curve.
• Watch out for Non-farm payrolls and Unemployment rate from the US today. Definitely today’s most important event and will move markets.
• Toyota was out with a loss at 436.93 bln. Yen vs. a profit of 1.72 TN Yen last year. Cuts dividend by 50% and present a very bleak outlook for 2009.

FX

Equities

Futures

FX Options

Stock,CFD, Fx and Forex Options – Data and Trades

Calendar

What’s going on?

• Yesterday’s ADP Employment Change was a lot better than expected – and the March figure was revised higher by 34K. Today’s Jobless Claims will probably confirm that we stopped losing jobs at an increasing pace… BUT the US economy is likely to continue losing jobs for the next two years.
• Stocks went higher again – completely disregarding the trend in earnings. We respect the S-T trend, but remain L-T bearish. The S&P500 might test the 200 DMA (now 958) or the big-picture resistance around the 1000 or 1014 (38.2% Fibonacci).
• Copper is rallying strongly and could break higher above the 220-level. That would lead to more (unwarranted) stock optimism.

FX

Equities

Futures

FX Options

Stock,CFD, Forex and Forex Options – Data and Trades

Calendar

What’s going on?

• Stocks were on the retreat yesterday led by Energy and Financials, despite a better than expected ISM Non-Manufacturing.
• The rally in commodities also took a breather and Treasuries gained a tad of luster again. Crude looks toppish and the risk-reward is favoring shorts.
• The focus today will be on banks: BofA is said to need $34B in additional capital. The Treasury will reveal conditions for repaying the TARP money today and the official stress-test results will be released tomorrow.
• Watch out for the ADP Employment Change and the Norwegian Rate Decision.

FX

Equities

Futures

FX Options

Broader Market Technical Analysis Update

by Roy Martens

The big picture hasn’t changed much this past month. The most surprising news, at least for the ones in the dark, was that China is hoarding Gold. Their reserves have risen a lot and they intend to expand their stockpile even further. Although this is very good news for Gold in the long run it didn’t really have a big impact on the Gold price last month, which is kind of surprising.

Such news is huge because the monetary reserves of China are enormous and although they say they will not shift their reserves into Gold at this time, I wonder if they will still hold that position if the dollar should tank.

Most likely this positive news was put aside by the announcement that the IMF intends to sell a lot of its Gold in order to raise cash and support the various countries that are in trouble, which should have a negative impact. We, however, have to look past this negative force for Gold because once the Gold reserves of the IMF (and other Central Banks) are gone there is nothing left to cap the price of Gold!

Due to the selling of the IMF ,Gold could suffer in the short term but it is my opinion that this fall (should it happen) will be a very good entry level for people that don’t already own the yellow metal.

As the Gold chart will show from a technical point of view, Gold is currently at an important stage and this upcoming month could be the set up for a rise to the highs or a fall to retest the $700 level (Impact of IMF selling Gold).

Whatever the outcome, Gold bulls are certain that Gold will reclaim its power further down the road. Will China be the only one to see the light? I don’t think so, there will be many other countries that will follow in China’s footsteps and I wouldn’t be surprised if a few of them, for example the other BRIC (Brazil, Russia, India) countries are already doing the same as China.

All charts are courtesy of Stockcharts.com

GOLD

The picture for Gold hasn’t changed much this last month. The flag pattern is still intact.

However, this pattern can’t continue for much longer because it will get too big to remain a valid flag, rather, it will then change into a channel. For now the blue lines are the most important ones to watch. They have to support Gold together with the 34 w. MA at $859.

If this level fails we can brace ourselves for a big fall, because the $700 will then be the next target again. As long as the $850 holds we expect Gold to break out of the flag pattern and start a new run at the highs.

SILVER

The Silver chart remains fairly positive. The flag pattern is still intact and completion doesn’t seem that far off.

The current correction wave could be a wave 2 but it is still too early to tell so this EW count isn’t valid yet. The chart is improving further with the 24 w. MA starting to curl up in support of an upcoming move. This move could be the wave 3 higher triggered by a breakout from the pattern.

The RSI and MACD are in perfect position to move higher and a new buy signal in the DMI (cross of buying power over selling power) will follow quickly if Silver moves higher from here on.

OIL

Oil is taking a breather after the first breakout attempt failed. It successfully re-tested the

17 w. MA for support and is moving higher again towards the resistance zone and the 34 w. MA.

The 17 w. MA is rising and should support Oil in the upcoming attempt to break the heavy resistance zone. If Oil succeeds it will trigger a huge buy signal because it will automatically mean a break above the 34 w. MA, a new LT buy signal. The first target after a breakout will be the $80 level ($78 is a 38.2% monthly fibo level shown in last month’s chart).

The technical conditions are improving slowly but are still in negative territory (RSI, MACD) while the selling power remains in charge, meaning that the current move higher is still ‘just’ a correction in the ruling downtrend.

USD

The Bulls are doing a good job supporting the USD. They have manage dto keep it above the 34 w. MA and the uptrend is still very much intact.

The downward pressure is still there and keeps building so the bulls aren’t out of the woods yet. As long as the 34 w. MA holds firm the bulls remain in the driver seat, but once it is taken out we will see a big sell signal and a trigger for a huge fall towards the 72 level.

The technical conditions are still positive but this can change very quickly. The RSI is a whisker away from triggering a sell signal and the MACD is on its way towards the 0 line. This upcoming month will be very interesting to watch.

COPPER

The chart for Copper is coming along as expected and the presented EW count fits nicely into the monthly chart that was shown last month.

The technical conditions have improved further and are in perfect position to get this wave 5 underway. The RSI is back above the 50 level and should start rising from here, the buying power in the DMI is trying to take over and the MACD is steadily rising towards the 0 line and the magenta resistance line.

If copper breaks above the resistance zone the indicators all turn positive at once and could trigger a very big move higher. The $300 level could then come within reach very fast.

ASX Market Report 1-05-09

View Full Report

The SFE Futures suggested an 18 point rise in the market. BHP and RIO both up in ADR form overnight – 0.80% and 3.15% respectively. (BHP closed at the equivalent of 3318c, down 8c on yesterday’s close.) Metals up overnight – Copper up 1.40%, Zinc 0.99% and Aluminium 2.54%. Nickel up 3.32%. Oil price up $0.16 to $50.35.
Gold down $9.30 to $891.20. Bonds down with the 10 year yield up to 3.1197%. A$/US$ down to 72.525c.

Financials down 0.8% – banks were sold off after gains yesterday. The House has passed a credit card law to prevent companies from suddenly boosting interest rates and to curb their more crafty practices. The government’s results from the stress testing of the banks will be delayed as examiners and executives debate the preliminary findings.
Energy stocks down the most – fell 2.1%. Oil and gas drillers down 3.5%. Big integrated companies like Exxon Mobil also brought the sector down – Exxon finished down 2.6% on a quarterly earnings report that fell short of expectations. Both Exxon and Marathon Oil posted quarterly profit over 50% below that posted in the same quarter a year ago – it was only last year than Exxon, the most widely traded oil stock on Wall Street, posted record profits – it was their worst result in 5 years. Doesn’t bode well for the oil sector’s impending results. Chrysler filed for chapter 11 bankruptcy – will temporarily halt most of its car production while completing a deal with Italian car manufacturer Fiat – a group of key creditors wouldn’t go along with Chrysler’s proposal to reduce $6.9bn in secured debt. Ford said the fate of Chrysler going bankrupt wouldn’t affect its own supply – up 9.7%.

Quiet day on our markets – down 10 points – a little disappointing considering the SFE Futures suggested an 18 point rise. Resources down 0.7% with BHP and RIO down 1.1% and 1.7%. Property and industrials down 0.3% and 0.1%. Financials up 0.2% – banks mostly up – NAB up the most at a 1.1% rise. Gold stocks down on the lower gold price overnight.

USD technical picture looking bearish if latest weakness follows through

MAJOR HEADLINES – PREVIOUS SESSION

• Australia Mar. HIA New Home Sales out at 4.2% vs. 3.9% in Feb.
• New Zealand Apr. Business Confidence out at -14.5 vs. -39.3 in Mar.
• Sweden Apr. Consumer Confidence fell to -21.0 vs. -14.5 expected and -16.5 in Mar.
• EuroZone Apr. Consumer Confidence out at -31. vs. -33 expected and -34 in Mar.
• EuroZone Apr. Economic Confidence out at 67.2 vs. 65.6 expected and 64.7 in Mar.
• Switzerland KOF Swiss Leading Indicator out at -1.86 vs. -1.90 expected and -1.65 in Mar.
• US Q1 GDP initial estimate out at -6.1% vs. -4.7% expected

THEMES TO WATCH – UPCOMING SESSION

• US Weekly Crude Oil and Product Inventories (1430)
• US FOMC Rate Decision and Monetary Policy Statement (1815)
• New Zealand RBNZ Official Cash Rate (2100)
• UK Apr. GfK Consumer Confidence (2301)
• Japan Apr. Nomura/JMMA Manufacturing PMI (2315)
• Japan Mar. Industrial Production (2350)
• Australia Q1 NAB Business Confidence (0130)
• Japan Apr. 30 BoJ Target Rate (no time given)
• Japan Mar. Housing Starts (0500)

Market Comment:

Swine flu – still a risk to be reckoned with
The swoon in risk appetite triggered by the initial swine flu scare has already been reversed as the market has made a decision that it is a non-story. We certainly hope that the market is correct on this matter, but are also fearful of the potential effects on everyone if this sanguine assessment proves premature. The influenza virus is extremely dangerous when it comes out in a deadly variant, especially as it can spread swiftly before victims show signs of flu symptoms. The incubation period of the disease is usually two days, but can be anywhere from one to five days and a person is most contagious starting before symptoms are even evident. The potential for behavior change is already very large and absolutely enormous if a second, more virulent wave of the virus . Already now, travel to and from Mexico is grinding to a halt, international football tournaments in Mexico will be played behind closed doors, and economic activity in Mexico’s capital has fallen 60 percent. So, again, let us all earnestly hope that the market’s optimism is justified on this matter, while understanding the potential for disaster. As the saying goes “Hope for the best and prepare for the worst.”

JPY and risk appetite
The JPY has finally weakened as one would expect with the continued robust signs of risk appetite. The yen has been performing relatively well all month. That performance is likely at least partially due to the spillover of end of the year effects (over the last five years, April has shown a strong tendency in reversing March moves into financial year end by the yen.). JPY crosses are likely headed higher still as long as this move in risk appetite can continue, though we think risk appetite will eventually run into tough going.  Watch the bond market for confirmation of the JPY’s direction, with rising yields tending to put pressure on the yen. Watch out also for the Bank of Japan tonight, for possible further QE-like moves.

USD and Commodity Currencies
The technical picture for the USD is looking very bearish after the full bore reversal to the weak side over the last couple of sessions, though we need to see a break of a few more levels out there to confirm that the weakening move has further to run considering the sharp direction changes of late. The commodity currencies are at the center of the action after they were briefly pummeled by the initial swine flu scares. AUDUSD, after shying away from the 200-day moving average on three occasions recently, has now snapped back higher and is challenging that level once again (see chart below). EURUSD was back challenging last Friday’s high ahead of the US data. The USD’s fate seems very wrapped up in the direction of risk appetite and equities of late.

US GDP
The initial estimate for Q1 US GDP was a much lower than expected -6.1% – almost matching the ugly Q4 numbers. It’s more than interesting to have a glance at the internal numbers that go into this calculation and to wonder now accurate an impression it gives of what is going on. For example, it is very tough to swallow that Services activity has failed to contract for a single quarter out of the last eight. Considering the profound economic disruptions of the last couple of years, we have to wonder what the data means, if anything. Also, the GDP price index inexplicably rose at an annualized rate of 2.9%. This means that other numbers, especially fixed investment, fell very sharply in order to come up with the overall poor number. Looking at the initial reaction to the data, the market seems to be taking the negative data in stride as all focus seems to be on the prospects of an imminent recovery.

FOMC preview
The market now awaits the FOMC monetary policy statement this evening. The last FOMC meeting shocked the market as the Fed declared that it would move aggressively with expansion of its non-traditional monetary policy measures and most importantly, laid out plans to purchase US treasuries outright. This time around, the Fed can hardly expect to surprise the market to the same degree unless Bernanke announces imminent cash drops by helicopter across the USA. The baseline scenario is that the monetary policy statement expresses continuity of existing policies with possible fine-tuning announcements as well as the hope that Fed efforts are gaining traction. Still, there is some chance that the Fed is not satisfied with the degree to which credit is being extended to the economy by the banking system, and especially, the disappointment that longer rates have failed to move lower. The 3.00% level on the 10-year notes is very critical and an obvious market focus at the moment. So there is a reasonable chance that the Bernanke announces a stronger intent to manipulate the long end of the curve with an enlarged treasury-buying spree. At the short end of the curve, with the rate effectively at zero and the Fed already having stated that it is likely to remain at zero for some time, we should expect no new guidance on the trajectory of the Fed Funds rate. A recent study by the Fed showed that the ideal interest rate in the US would be -5% – thus indicating how much it would like to lower rates wherever they can be lowered.

RBNZ alert
Watch out for the RBNZ tonight, which is expected to drop rates 50 basis points 2.50%.

Chart: AUDUSD
AUDUSD is up challenging the 200-day moving average once again. If the positive mood continues here, a break higher would seem to be in the cards, perhaps toward the symbolic 0.7500 level. The bears need 0.7000 again to confirm that a top is in.

About Forex

FOREX is an international foreign exchange market. Its abbreviation derives from the word combination denoting currency transactions – Foreign Exchange. As one of the youngest market financial markets – Forex in its present identity has been around only since the 1970s – this foreign exchange market is nonetheless the largest in volume and the most dynamic. The daily trade on FOREX consists of 4 trillion USD, 30 times greater than the combined volume of all the other capital markets in the US.

As with any other market FOREX conducts business with a base asset. In case of the foreign exchange market this asset is the national currency of different countries. The fundamental cause of exchange rates fluctuations is the demand of government institutions and commercial companies around the world for converting profits earned from the sale of goods and services abroad into their national currency. This sector constitutes approximately 5% of the general trading of the foreign currency market. The other 95% comes from the speculation capital of foreign exchange traders trying to derive a profit from currency fluctuations.One of the main advantages of the foreign exchange is stability. The principal threat to any financial market is unexpected market failure and market index collapse. However, unlike capital markets, FOREX does not fail. If prices for shares suddenly drop, it’s a catastrophe. If the dollar collapses, it just means that another currency has grown stronger. For instance, the yen once within the period of a few months rose 25% against the dollar in 1998. On certain days the dollar fell ten percent and more. However, the downturn for the dollar could not become a reason for a foreign exchange market crash, and trade continued in its usual fashion. This is precisely why there is market and business stability for foreign exchange transactions. Foreign currency remains the most liquid and reliable trading instrument.

Of greatest interest for speculators are the so-called standard (the most liquid) currencies. Today more than 85% of all transactions are use standard currencies like the United States dollar – USD, Japanese yen – JPG, Euro – EUR, British pound – GBP, Swiss franc – CHF, Canadian – CAD and Australian dollars – AUD.

As important stage in becoming acquainted with foreign exchange trading is understanding the system of currency exchange markings. This is a relatively simple task taking into account that all standard currency pairs are indicated the same way – on opposite sides of the slash mark “/” there are two symbols, the relationship of values of which is the exchange rate of the currencies: EUR/USD (the exchange rate of Euro against US dollar), GBP/USD (exchange rate of the British pound against the US dollar), USD/JPY (exchange rate of the US dollar against the Japanese yen) etc. The slash mark “/” is often omitted and currency pairs are spelled in the following manner: EURUSD, GBPUSD, USDJPY.

The gist of FOREX operations is completely transparent- earning a profit from currency transactions based on market fluctuations in the relationship between one currency against the other: the entire foreign exchange market consists of the total of currency pairs each of which reflects the value of one national currency in relation to the other. For example, if we say that one euro is worth 1 dollar and 47 cents, that means the exchange rate of EUR/USD equals 1 : 1.4700.

 Experience Forex Markets

Learning the foreign exchange basics is one of the most important things you need to consider if you wanted to delve into the world of currency trading. At its most general sense, it is important to get into forex with the right mindset and skills in place. Having a natural affinity for conducting business is important because once you have this it will be a lot easier for you to figure out how you will play the field.

To help you decide about the ins and outs of forex currency trading, here are some of the most important tips you need to know:

1. Learn to maximize your profits – Do not be too complacent with just one trading method. It would be best to try your hand at the various forex trading methods so you will also become more familiar with how others in the business probably conduct their business. Know how to boost your profits by being more in the know. Scan the market for possible trades. Focus not just on individuals but try to get the market share of big businesses as well because these financial institutions are the ones which mostly need a continuous flow of currencies.

2. Become a smart trader – It’s safe to say that this tip is the most important when it comes to learning the foreign exchange trading basics. No matter how much you know the technicalities that come with trading currencies, it will never be enough once you get to stay in the industry for a longer period of time and start to deal with different personalities. You should also be able to understand when it is okay to take a risk and when would it be best to just let it pass you by. Values and rates in the foreign exchange trade are always changing and in a matter of minutes prices may fluctuate so you need to keep your business instincts on alert.

3. Instill discipline in trading – You must have a system which you follow throughout the duration of your trading. You need a system so that you can figure out your weaknesses and strengths so you will be able to change them accordingly. You should also allot a specific time for trading. Make sure that when you are trading, you are not doing anything that is unrelated to that because you will need to be focused on the market. You should also trade according to the set rules and regulations. Keep your word should you opt to do business with fellow traders on a set date or on pre-agreed rates.
4. Keep learning – The foreign exchange trading basics still develops and gets harnessed through time. So have an open mind and consider the fact that you will need to constantly educate yourself regarding the trade. Keep yourself abreast of the latest technologies and methods being used. Make time to research about foreign currency trading and read up related news on this industry. There are lots of free learning materials that you can conveniently obtain online.

Source: The Groshy