Fibonacci method in Forex

Fibonacci Retracement Levels are:
0.382, 0.500, 0.618 — three the most important levels
Fibonacci retracement levels are used as support and resistance levels.

Fibonacci Extension Levels are:
0.618, 1.000, 1.618 — three the most important levels
Fibonacci extension levels are used as profit taking levels.

So, what we will learn today is how to apply Fibonacci tool and how to interpret results that we see on the screen.

To set up Fibonacci on the chart we need to find out:
1. Is it uptrend or downtrend?
2. Highest and lowest swings in the chart formation (A, B points).
And go with the trend!

So, click on Fibonacci tool from trading platform that you use. Now, as shown on the Figure 1:



We have an uptrend. A — our lowest swing, B — our highest swing. So, we will look to BUY some lots at the good lowest price and go up with the trend.

Click on A and drag your cursor to B, click. There you go! You must see different lines appeared on your chart. Those lines are called Fibonacci Retracement and Extension Levels.

To calculate Fibonacci levels yourself, refer to How to calculate Fibonacci levels.

So, what we are expecting is next: the price should retrace (go down) from point B to some point C, and then continue up in the direction of the trend.
Those three dotted lines (0.618, 0.500, 0.382) at the bottom on our picture shows three Fibonacci retracement levels where we expect the price to take a U-turn and go up again. There we will place our BUY order.
The best situation would be to buy at the lowest level — 0.618 — point C. And on practice the price usually gives us this chance. However, 0.500 is also a good level to place a BUY order.

Well, let's take a look at the progress.



The price has successfully reached the lowest 0.618 point and made a U-turn.

So, now when we have our BUY order placed at desired point C, we would like to set some targets to take our profit in the future. For profit taking levels we use Fibonacci extension levels (0.618,1.000, 1.618). The most common is 0.618 extension level, but when the price shows good potential to reach next 1.000 or even 1.618 level, you can leave your trade to get that target too. We will choose 0.618 extension level as our profit target, and according to Figure 2, D is our point for taking profit.

Important note: In this Fibonacci tutorial 0.618 extension level (as well as 1.000, 1.618 levels) are calculated in relation to the point B, which means that B point represents a 0% extension.Some Forex traders like to start counting from point A, then the distance from A to B would be already 100% of the price move. Thus moving further from B would be 1xx.x %.
For example: looking at the last picture, if to start counting from point A, then point D would be a 1.618 Fibonacci extension level or a 161.8% of the price move.

Forex market hours. When to trade and when not to

Forex market is open 24 hours a day. It provides a great opportunity for traders to trade any time of the day or at night. However, although it seems to be not very important at the beginning, the right time to trade is one of the most crucial points to be successful in trading at the forex market.
So, when should one consider trading and why?

The best time to trade is when the market is the most active and therefore has the biggest volume of trades. More active currency moves will create a good chance to catch the trade and make some profit. A calm, slow market is literally wasting of time — turn off your computer and don't even bother!

Forex trading hours, trading time:

New York opens 8:00 am to 5:00 pm EST
Tokyo opens - 7:00 pm to 4:00 am EST
Sydney opens - 5:00 pm to 2:00 am EST
London opens - 3:00 am to 12:00 noon EST

Open ForexMarketHours application in a new window

And so, there are hours when two sessions are overlapped:

New York and London — 8:00 am — 12:00 noon EST
Sydney / Tokyo — 7:00 pm — 2:00 am EST
London / Tokyo — 3:00 am — 4:00am EST

For example, trading EUR/USD, GBP/USD currency pairs would give good results between 8:00 am and 12:00 noon EST when two markets for those currencies are active.

At those overlapping trading hours you'll find the highest volume of trades and therefore more chances to win in the foreign currency exchange market.

Tips On Forex Trading Signal Software

If I ask you to name the five most important things in your life without which you can not possibly survive, you would probably count money in. Money is indeed an absolute necessity these days to live a comfortable life. You need money not only for your basic needs such as feeding your family, but also to buy things that help you to live a happy and content life.

There are various ways to earn money and it depends on an individual to choose the right way of making money. Some people work for an organization and trade their services for money, while others prefer running independent businesses to earn the money they need.

However, there is another way to make money which is called trading. People trade in a number of things, such as stock trades, commodity trades etc. But those who trade in money make millions of dollars in a very short time.

This kind of trade is called Forex trading. In the Forex market, you buy or sell currencies. Forex is the largest and the most liquid financial market in the world that operates 24 hours a day and produces monetary transactions that amount up to 2 trillion dollars in a single trading day.

One distinguishing fact of the Forex market is that, unlike the stock market, the Forex market has no centralized location. Markets across the world have different time for opening and closing which means that this type of trading is open 24 hours a day. Trade starts in Australia and ends the next day in New York.

It's a fact that the Forex market is one of the best money making financial markets in the world. A lot of people have made millions of dollars in the Forex market and that too in a very short amount of time. Some people consider the Forex market as one of the best career that anyone can ever get into. And for this reason, people have quit their regular jobs and ventured in the Forex market to get a piece of this huge pie.

However, as you can guess, along with the money making advantage, there is equal amount of risk in the Forex trading, which you can not overlook. As the rate of the potential returns increases in any market, the risk of losing money increases too. It is a known fact that many people who ventured into this very large financial market have lost a lot of money and some even suffered huge financial losses. This is why you should think hard about it first before you even consider entering this financial market that offer huge potential to make money and also equally risky market.

Sound financial and market knowledge is an important aspect to any type trading. To be successful in Forex market, you should have the right knowledge and skills to trade currency. The basics of a Forex market is that you should buy low and sell high in order to make a profit. In addition, there are many different strategies involved using which you can earn money even when the market is down. You should also practice few techniques that help minimize the losses.

With time, trading in Forex has become possible from the comfort of your home. Thanks to the improvement and the advancement in communications technology, everyone who has investment potential and forex trading skills can now trade online and earn money from home.

All you need is a fast computer dedicated to your Forex trades alone and a fast Internet connection to avoid lags in updates in prices. You will also need a software program which acts as trading platform and assists you with your trades in the Forex market.

Obtaining the software program is easy. When you register and open a Forex account with your preferred Forex broker, the broker or the brokerage company will provide you with either an online version of software program or a downloadable and installable software program that you can install and run from your computer.

As there are many software programs available for Forex trading, it is important to choose the right one to suit your needs. You have to determine if the software has all the necessary things to assist you with your trades. For example, a good Forex trading software program should allow you to see real time charts, real time price updates and also let you use different tools that you need to effectively trade in the Forex market.

Safety and reliability are the two other points that you should consider in making the right choice for Forex trading software. The software should save you from hacker attacks or malicious transactions and should offer a safe channel for data exchange. The software should allow you to back up your data and also to restore it back in case of any damage or problem.

Information from this article should give you a basic understanding of Forex trading and guide you in obtaining resources for trading effectively in the Forex market. You can rest assured that with the right knowledge, skills, and the right Forex trading software, you can increase your chances in making a profit and decrease the risk of losing money in Forex market.

About Forex Mobile Trading Software

The Forex market, which has made a number of people rich in a very short of time, is the largest and the most liquid financial market in the world. With transactions occurring worth up to 2 trillion dollars each trading day, who wouldn’t want to join and make big bucks?

Sure, not many people knew about Forex earlier, but now a lot of people are beginning to realize that this particular market can really give them the opportunity to make lots of money. If you learn the tact of this business and do your homework right, it can turn you into a millionaire overnight.

Of course, with great rewards come greater risks too. Do not forget to consider that the Forex market also has its risk. You have to consider that aside from the fact that it can give you a chance to earn a lot of money, you should also realize that the risk is also equally great, maybe even more. It is a fact that people who have entered this financial market without the right knowledge and skills have lost a lot of money.

In the past, as per its strict policies, the Forex market allowed only large financial institutions and multinational companies to participate in trading. However, thanks to the advancement of communications technology and the availability of high speed Internet, the Forex market have opened its doors to individual traders and brokers. Even a common man like you and me can now trade in the Forex market without any trouble.

Because of all the advantages that the Forex market offers, a lot of people have entered this very large liquid financial market with the ambition of making it big. Though it doesn’t take much time to learn the basics of how to trade currencies, it needs extra efforts to learn about the different strategies and skills essential for successful trading.

The basic trading rule in the Forex market is that you have to buy when the price is low and sell when the price of the particular currency you are holding is high. If you already have this basic knowledge about the Forex trading, the next thing you should do is to learn and practice different trading techniques.

As such for performing Forex trading, you need just 3 things- a computer that is dedicated for your Forex trades, a fast and reliable Internet connection to avoid slippages and Forex trading software to help you with your trades in the Forex market.

The Forex trading software is used as a trading platform and can easily be downloaded from the internet for a certain fee. You can also use online software that many online Forex brokers offer. All you need to do is register and open an account with a Forex brokerage website. After you open an active and funded account, you will then be granted access to their Forex trading software that you can use in your Forex trades.

You must ensure that the software has the following features:
Real time updates of prices to avoid slippages.
Show prices of currency pairs.
Shows charts and should have charting features.
Stop loss button for risk management.
Open Positions window
Closed positions window
Account window

Other than these, many software companies offer real time alerts and tools for strategic planning. You can also consider few other key features such as guaranteed stop-loss rate and rate freezing, before making a decision about the software.

Since the Forex market is a very risky market, you should get the best software with the best features. In order to know which software can suit your needs, you only have to try out different software programs by opening a dummy account with the Forex brokerage company. Most Forex brokerage companies online can offer you a free trial of their software to enable you to determine if the software suits your needs or not.

Forex trading is a complex business and must be performed carefully. You need to have right tools and techniques as much as up-to-date knowledge of the Forex trading market. Thus choosing the right software becomes the key to effortless and successful trading.

The Latest Online Forex Trader Brokers System

Some brokers are exceedingly distinguished people to their clients, but there are those that are not. Brokers may work for insurance companies, real state, and even companies which supply trading systems. They are influential people which many individuals can rely on whenever they would need help of some sort. But a broker system differs.

The online forex trading broker system has a principal function of supplying clients with trading platforms. Trading platforms are well-known as the place to trade. There are also forex broker systems which supply training and programs which educate clients on how to invest money and how forex trading is being completed.

The training that is provided by these broker systems help several trade investors to reduce risks whilst maximizing profits. Investors therefore are able to profit a lot from these broker systems due to the facr they may also be able to acquire forex advice, help, knowledge, currency analysis, stock, and the coming market. Some also supply trading ideas and daily picks from newsletters.

The final goal of almost any forex broker system is to make an investor succeed. And this can only be achieved with a system having accomplished professional teachers and advisors who are able to give directional market tuition and forex training.

Beginners of the trade should be made aware that forex trading is a high risk investment. The currency market offers a lot of opportunity to earn huge amounts of profits but at the same time coupled with a lot of risks. Currency trading can give you a fortune in minutes, days and hours. But the sad truth is that it can also be lost just at the same time.

Currency forecasting is not an easy task, which is why many traders should not forget to gain knowledge of the trade first before they decide on making a trade. An intensive forex trading course can help in the learning of all the in and outs of trading. The pros can supply you with the needed educational knowledge before entering the real world of forex.

You can find a complete forex trading course that is of reasonable cost either online or in a traditional class. Look around, or you can ask around for a good trading course available.

Additional services are now provided by many broker systems to draw the attention of prospects and clients. Forex is considered as a sophisticated game, which is why you need a forex broker system.

Get scrolling updates and information for the individual currency trader. Federal Reserve's intention about the interest rate is also required by traders, and a broker system will help in finding and providing this information. Professional traders repeatedly write newsletters that can be of good use by other forex traders, they will be able to supply information about technical and fundamental analysis. Set up alerts are sometimes provided to give traders certain ideas for them to make more money.

Broker systems are entrusted by many individuals to buy and/or sell on their behalf. Make sure that the broker is registered as an FCM with the CFTC. FCM stands for futures commission merchant; and CFTC is commodity futures trading commission.

First, you would need to have an account before you can set up a broker system. You can find a lot of them online, but make sure that you choose one wisely. You must ask about the fees being charged.

Friends and co-workers are a good source of trusted brokers; ask about the broker's information and the troubles that they encountered, if any.

Online forex broker systems provide different services, but they should particularly be quick in buying or selling and automatic execution. The 'spread' should be clearly identified, whether variable or fixed.

Pay thought to even the littlest thing before signing up for a forex broker system. The margin terms are also of utmost consideration. Ask how margins are calculated and margin requirements.

The broker system should be trustworthy and its efficiency as to performance should not be questionable. The trading software used by the trader is quite indispensable, that is why you should first see all the available options for you. Take advantage of free demos, this will help you greatly in making an informed decision.

Check all the policies of the forex broker system. Read especially those in fine print; oftentimes it is the most important part that the investor fails to read.

Warning Do not invest money you cannot afford to lose

There is significant risk in any foreign exchange deal. Any transaction involving currencies involves risks, including, but not limited to, the potential for changing political and/or economic conditions, that may substantially affect the price or liquidity of a currency.

Moreover, the leveraged nature of Forex trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of your initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin call within the time prescribed, your position will be liquidated and you will be responsible for any resulting losses. �Stop-Loss� or �Take-Profit� order strategies may lower an investor's exposure to risk.

Penny Stocks Trading: Tips to Create Wealth

Penny Stocks are often defined as stocks priced below $5. The stocks that are traded at a very low cost, for even under $1, often for under a penny, are given the name 'Penny Stock'.

It is often implied, but isn’t necessarily true, that penny stocks are also micro caps with capitalization of less than about $250 million, and is therefore capable of creating vast wealth.

It is interesting to note that penny stocks are found across the full range of capitalization from micro caps to large cap stocks. For example, Sun Microsystems (NASDAQ: SUNW) met the definition of a penny stock for much of 2004, trading between $4 and $5. In late 2004, trading between $5 and $6 per share, its capitalization was over $18 billion! These are typical micro cap penny stocks.

The small investor has a clear-cut advantage over others when an early position in a good micro cap penny stock is taken by him. As a group, micro cap penny stocks are generally avoided by large funds since prices are very easily affected by sizeable buy and sell orders. Also, capitalization is too small to affect a large fund’s bottom line.

There are insider responsibilities involved in buying more than 10% of a publicly held company. To avoid this, large funds usually don’t take up penny stocks – not even the micro cap ones.

Apparently low-stake and low-load, penny stocks can be quite risky because prices move too often. That is the reason why most wise stock market investors avoid them, even when money is there to be made in this market.

High risks exist in these because of their wildly fluctuating prices. Hence the first tip to create wealth with penny stocks is: try to get into investing in these stocks if you have prudence and low tolerance limits.

You may feel especially attracted to these, since it is possible to put small money in search of high returns. In that case you must try to know the company the stocks represent carefully and extensively. And only then can you expect big money from your penny stock.

Keep away from unknown companies. Most penny stocks come from newly instituted companies which are as a matter of fact, totally unknown, so the investor has hardly any information to depend upon when attempting to make an investment decision. Sometimes behind the widespread ignorance they are of companies in very serious financial state or may be almost on the verge of bankruptcy. It is better to avoid penny stocks unless you have dependable information from insiders.

Another high-risk pitfall comes from the important difference in how penny stocks are traded. They are confined to secondary markets – to the Pink Sheets, for example. There the liquidity measure of how easy it is to buy and sell a stock is much lower than they are in the majors.

Given the low per-share price, it is not unusual for individuals to hold hundreds of thousands of shares. Frequently the liquidity evaporates soon, making it impossible to exit such large positions without severely dragging the share price further down.

So if you are attracted by the high liquidity in secondary markets, don’t lose your control, and keep note of every small tendency. Good research and its application will be needed if you want to avoid the hidden pitfalls of the penny stock market and try to make a profit.

Should You Trade Futures?

Trading futures means buying or selling in futures contracts. A futures market is a centralized place of exchange for such buyers and sellers from all over the world who meet and enter into futures contracts.

The futures contract states the price that will be paid at the date of delivery, which always is a future date. The fun about this kind of trading is that most of the futures contracts do not make an actual physical delivery of the commodity at the end!

The price may be settled upon through an open cry auction, or bids and offers can be matched electronically. You may go for futures trade if you feel attracted to try and make profits from long-term speculations on prices of goods and services.

To see what a futures market is and how it works, we can take an analogy from common experience.

Suppose you decide to buy a three-year internet service. You then have to enter into an agreement with a supplying company, specifying a certain quality of service at a certain rate, to be paid every month for the following three years.

This is very akin to a futures contract. In a futures contract, you agree to receive or provide a product at a future date, with the price and terms for delivery pre-fixed in the contract.

In our example, the actual price of the service may rise or fall during that three-year period, but the futures buyer has secured his/her price for the next three years (or as the case may be) and reduced his/her risk of higher prices, while foregoing the opportunity of gaining from lower prices.

Though we hear of the futures market mostly with reference to stocks, this type of trading may very well extend to any product. A producer of potatoes may be trying to secure a selling price for the crop in the next season, while a producer of French Fries may be trying to secure a buying price, to help him decide on the quantity of fries to be produced to project the level of profit.

So the farmer and the French Fry seller may enter into a futures contract requiring the delivery of 5,000 units of potato (whatever might the unit be) to the buyer in March at a price of $40 per unit. By entering into this futures contract, both the French Fry seller and the farmer secure a price that they believe to be advantageous in March.

It is not the actual crop itself but this contract, that is then bought and sold in the futures market. The party who agrees to deliver a commodity is called a short position and the party who agrees to receive a commodity, a long position. A futures contract is an agreement between the long and short positions.

The profits and losses of futures are calculated on a daily basis as they occur from the daily movements of the market for that contract. For example, say the futures contracts for potato increases to $50 per unit the day after the above potato farmer and fries maker enter into their futures contract.

The farmer, as the holder of the short position, has lost $10 per unit because the selling price just increased from the future price at which he is obliged to sell his product. The fries maker, as the long position, has profited by $10 per unit because the price he is obliged to pay is less than what the rest of the market will be obliged to pay in the future for potato.

As the market moves every day, these kinds of adjustment are made accordingly. Unlike the stock market, futures positions are settled on a daily basis, which means that gains and losses from a day's trading are debited from or credited to a person's account each day.

If you have an aptitude for analyzing successfully these everyday trends, and if you hope to be rewarded for your accuracy in reading these signs every day, the futures market is the thing for you.

Stock Trading Plans

A trade in stocks requires complete planning much ahead of getting into executions.

Planning consists of making oneself prepared for all contingent actions that may be necessary for rational decision-making regarding investments in stocks. It means a systematic action strategy with a long view.

To take a planned approach, one needs to understand in advance when and how much to buy, and when to quit. Once a trade is executed the price and options can no longer be controlled by the normal private investor.

The most important questions addressed to by a planned trading system are

i. How much money to put in
and
ii. How many positions to trade at a time

Right answers can be found through money management, which is the most important component of a trading system. The quantum allotments and timing of entry and exit need to be decided through a sophisticated system of reasoned and researched approach. A considerable fraction of success comes from this planning based on academic studies.

A positive risk attitude is an essential component in stock trading plans. Persons shy of taking any sort of risk is an unlikely candidate for stock trading success. Consistent conjectures based on confidence, and the rational application of research will see you through most risks.

Stock trading plans involves adopting a positive outlook towards the future while keeping track of what has happened in the past, and designing your strategy to handle all options in situations that may give rise to high profits.

For this, you need to devote some time to analyzing and researching the system and forming a strategy that will be strictly followed. Include in your plans a fixed time each week when you can review what you have done and project what you still need to do.

The wise investor should not be swayed by the fluctuations of the market, but rather keep a cool eye on events. You should have a mid- to long-term approach and a trend-following trading style without any falling prey to fear and greed. You must stick to the system you worked out with absolute discipline.

Your trades must be fully planned with pragmatic acceptance of good times and bad times and the readiness for all possibilities in advance. This means that a detailed evaluation of every potential opportunity needs to be studied and compared before any action is taken.

Irrespective of your investing strategy (Value, Growth, Buffet, etc.), coherent and repeated evaluations of each stock are required. There will be specific metrics that you use for the purpose such as, ratios of price to earnings, price to sales, debt level, sales growth, etc, can vary for each investor, but for one investor, the same metrics should be used on all stocks being considered. And lessons from these exercises must be utilized fully in the stock trading plan.

There are quite a few highly informative websites these days that provide a very good resource for getting news, quotes, analyst forecasts, and ratings for stocks. Take advantage of these, because a stock trading plan must include reading the news about investments in the market.

Forex Trading Tips (more..)

Forex trading is buying and selling the foreign currencies of different countries. It has a similarity with stock trading in that the foreign currencies behave like shares of the currency institutions of the countries. Like stock prices, these also move up and down with time-dependent volatility.

It is possible to buy a currency low, buy long and sell short another high currency. It needs meticulous pursuit of the exchange rates of currencies you want to trade. One needs to keep up a continuous scrutiny of the trajectory every particular currency vis-à-vis the other currencies, pair-wise.

It often has leverage enough to induce highly profitable arbitrage and hedging. Each internationally accepted currency has a market and the Forex market is the superset of all these markets taken together. Traders make their own basket or inventory of Forex and trade according to their anticipation of movements.

For example, the primary Forex statistics for the euro in relation to the German mark prior to 1999 reveals a lot of interesting features and profit potential of dollar or German Mark in relation the euro.
From the evidence it appears somewhat surprisingly that the euro lost ground against the US dollar in Forex spot trading, and in quite a few dimensions did not match the international transaction role of the German mark.

The euro changed the structure of the Forex market and increased market transparency through currency elimination. This exposed the dealers to higher inventory risks as their respective inventory imbalances became exposed easily to other dealers.

The increased inventory costs were recovered by the dealers in the euro markets through higher spreads. This made the euro a less attractive transaction medium than the German mark. This shows how trading in Forex involves both risk and profit potentials.

Earlier, the fore market was the trading ground of millionaires and billionaires only. Now with the introduction of online Forex trading, the average person is able to create amazingly large amounts of wealth from safe online investments in foreign currencies. Online forex trading is nothing but Forex trading transacted through internet links and email through a competent broker.

No technical know how, big “risk”, or large investment, hard work is needed. Online forex trading investment lets you use your dollar to control an investment two hundred times as high, $1 to control an investment worth $200, $1000 to control $200,000 and so on and on worth of investment.

Through online forex trading, you are now able to invest your money to fetch more money for you like the millionaires and billionaires, instead of you laboring hard for your money.

Online Forex trading is real fun. It is often the most striking and profitable internet investing opportunity because you can do it from your PC or connected laptop from any place in any country in the world.
You don’t need any stocks or big inventory in this trading. In online Forex trading, all you do is, just open an account with one of the brokers with as little as $300 or so. Of course, the larger your initial investment, the faster you stand to gain wealth.

Then you simply have to follow simple instructions to purchase and sell the currencies. You buy when the price of the currency is low. Within a few seconds or minutes, the price may go up, and you may sell it and make a profit. This way, by just buying, selling and trading these foreign currencies for about 3 or 4 hrs in a day, you can easily make $500-$1000!

Forex trading is easy money. Especially with the introduction of online trading, it is virtually a continuous upward money spiral for any alert person with a competent broker.

The Main Principles of Trading

In contrast to exchange transactions with real supply or real currency the participants of FOREX use trading with a margin deposit; i.e. marginal or leverage trading. In marginal trading, each transaction has two obligatory stages (they can be divided by period of time, which can be as long as you like): buying (selling) of currency at one price, and then selling (buying) it at another (or at the same) price. The first transaction is called opening the position, the second one, closing the position.

Opening a position, a trader furnishes a deposit sum from 0.5 to 4 per cent of the credit line, granted for the transaction. So, in order to buy or sell 100,000 US dollars for Japanese yens, you will not need the whole sum, but only from 500 to 2000 US dollars depending on your policy of controlling risks. When the position is closed, the deposit sum returns, and calculation of profits or losses is done. All the profit or losses caused by the change of currency rates is credited on your account.

Let's take a concrete example of getting a profit from the changing the rate of the Euro, from 0,9162 to 0,9292. If you have anticipated this change by using technical or fundamental analysis, you can buy the Euro cheaper for dollars, and then sell it back at a higher price. For example, if you choose leverage 1:100, then 99,000 dollars of the credit line, granted by the Internet broker, is added to 1000 dollars, and you buy the Euro at the price of 0.9162. As a result of this transaction we get: $ 100,000 / 0.9162 = Euro 109.146, 47.

When the rate changes (an average daily change of Euro is about 70 to 100 pips), you close the position and sell the Euro for dollars, but at the rate of 0.9292. You get 109,146. 47*0.9292 =101,418.89 dollars. Your profit is $ 1,418.89. The same transaction with leverage 1:200 would give you $2, 837.78 of profit, with leverage 1:50 the profit would be 709.45, with leverage 1:25 - 354.72.

We'd like to remind you that the higher the credit leverage, the higher is your profit if the fluctuation of the currency rate was anticipated correctly. However, if your anticipation was wrong, your losses will be bigger.

What is a Stop Order and How to Perform It?

Since there are different types of orders in the Forex market that would permit you to be more specific on how you want your traders to carry out your trades like whether you should place a stop or a limit order, you are entitled to command your broker about your prerogative to refuse the market price and instead you want to move your stock price in a particular direction before you execute your order.

In a stop order, your trade will be carried out once the security you want to buy or sell reaches a specified price (stop price). If this happens, a stop order essentially becomes a market order and is packed. And once the order is turned on, the investor is guaranteed an execution, but execution prices do not. This order is used by investors to control the loss that they might have or to lock in a profit on a stock. They may issue this order to their stock broker to automatically sell the stock if the price of stock would fall down to a particular price.

There are also instances that these stop orders are not always executed at the stop price. If an incident happens that the stock falls down suddenly by a huge amount, the stop order may be triggered and the stock could be sold. On the other hand, since stocks are always sold at a market price, the price might be below the stop price. This type of order is usually entered into a computer trading system and is automatically carried out whenever the price is at or below the stop price.

The use of this order is more common for stocks that trade on an exchange than the over the counter (OTC) market. Moreover, your broker-dealer would not permit you to lay this order on some securities nor accept a stop order for OTC stocks. Before entering into this type or order, consult first your broker or financial advisor about how this order works.

It is advantageous to investors to use the stop order because they can monitor their stocks for a period of time or on a daily basis and brokers may even position this order for no charge. Since investors commonly use this type of order, this allows them to have a quick and automatic response to stock price movements.

Buy and hold investors are doubtful to use this type of investment strategy. One disadvantage of this order is that the stop price could be activated by a short term variation in a stock’s price. Once your stop price is attained, this order becomes a market order and the price you had may be different from the stop price primarily in a fast moving market where stock prices vary swiftly.

The price of an order could be lower than the specified price by this order. In addition, investors must be careful about where they set a stop order for it may be harsh if it is turned on by a short term fluctuation in the stock’s price.

How Do I Read the Stochastic Indicator?

Stochastic Indicator is another type of overbought/oversold indicator that is very popular among stock traders and futures traders. This indicator was developed by George Lane in 1960s. George Lane assumed that as the price of an instrument increases, the daily closes tend to be closer to the upper end of the recent price range. On the other hand, as the price decreases, the daily closes tend to be closer to the lower end of the recent price range.

The STOCH is plotted as two lines called %K, a fast line and %D, a slow line. These two lines have the following characteristics: %K line is more sensitive than %D; %D line is a moving average of %K.; and %D line triggers the trading signals. Confused? Deal %K as a fast moving average and %D as a slow moving average. At the 80% and 20% levels, "trigger" lines are normally drawn on stochastic charts. When these lines are crossed, a signal is generated. Stochastic bands are what we call the zones above and below these two lines.

Apply the following formula in order to calculate the stochastic indicator. A scale from 1 to 100 is used to plot the results from the calculations of the formulas below:

%K = [(CCP - LOWn) / (HIGHn - LOWn)]*100

where:

CCP - current closing price

LOWn - the lowest low for the previous n trade periods

HIGHn - the highest high for the previous n trade periods

n- typically it is 14, may also vary. The %K value is 0 when the CCP is the lowest for the last n trade periods. Likewise, the %K value is 100 when the CCP is a highest for the last n trade periods.

%D = SMAn %K

where:

SMAn - simple moving average across n periods; typically n=3

When using Stochastic Indicator, you should be able to determine on how and when to trade.

Overbought / Oversold: The market is in an overbought or oversold mood when one of the stochastic lines crosses the 20% and 80% levels. It means that when the stochastic falls below 20% level then rises above it, then we should buy. And we should sell when the stochastic rises above 80% level then falls below it.

Crossover: The STOCH is plotted as two lines, the %K line and the %D line. They are like two moving averages indicators, one of them is fast and the other is slow. When %K crosses down up the %D, we should buy. But when the %K crossed above down the %D, we sell.

Divergences: There is a good signal for buying or selling the security when there is a divergence between the stochastic lines. The market is weak if prices are making a series of new highs and the stochastic is trending lower.

Simple Moving Average (SMA) and Technical Analysis

One of the easiest methods in Technical Analysis is the Simple Moving Average or SMA. It is the simplest type of all the moving average. The SMA shows the average price of a given time period. And each period carries the same weight for the average. SMA helps to smooth the price curve for better trend identification. In fact, the longer the SMA period selected, the smoother the curve.

Since it is the simplest of all the moving average, the math behind SMA is also simple. The average price of a certain period is represented by SMA and it is calculated by summing up the prices of instrument closure over a certain number of single periods divided by the number of time periods. Take note that short-term averages respond quickly to changes in the price of the underlying, while long-term averages are slow to react.

SMA = SUM (CLOSE (i), N) / N

Where:SUM - sum; CLOSE (i) - current period closing price; N = number of periods in calculation.

For example you want to plot a 5 period simple moving average on a 1-hour chart, you should add up the closing prices for the last 5 hours and then divide it by 5. If you want to plot 5 period simple moving an average on a 30 minute chart, then you should add up the closing prices of the last 150 minutes and divide it by 5. So if you want to develop an SMA chart for USD/JPY closing price in a 5-day time frame, how would you do it?

For example the first 5 days USD/JPY closing prices are 125.0, 124.0, 126.0, 123.0, and 127.0. The average of the first 5 days USD/JPY closing price that will be the first dots of the SMA graph is 125.0. The second SMA point will be (124.0 + 126.0 + 123.0 + 127.0 + 126.0)/5= 125.2 if we assume the USD/JPY closing price for the day six is 126.0. So the calculation goes on for the following dots. And joining these SMA dots defines the SMA chart. In other words, SMA is the average stock price over a certain period of time.

Formula for the 5 period SMA 5 period SMA = (Price1 + Price2 + Price3 + Price4 + Price5) / 5

Simple Moving Average operates with a delay just like any indicator. You are forecasting of the future price, not a concrete view of the future, because you are just taking the averages of the price. Although all calculations will be provided by most charting packages, it is important to understand how simple moving averages are calculated. By understanding, you can decide on which type of tool is best for you.

The Value of Trade Balance to Local Economy

The balance of trade also referred as trade balance, which sometimes is symbolized as NX, is the difference of the monetary value of imports and exports in one economy in a given period of time. The balance of trade is considered the biggest part of a country’s balance of payments.

Imports, domestic spending, foreign aid, and investment abroad are called debit items while credit items includes exports, foreign investments in domestic economy and foreign spending in domestic economy.

A trade surplus is a positive balance of trade which is consists of more exporting than importing. A trade deficit is the negative balance of trade or sometimes called a trade gap. The trade balance can sometimes be divided as services balance and goods balance just like in the United Kingdom which they use the terms invisible and visible balance.

The balance of trade is a part of current account which includes transactions that includes income derived from international investment and international aid. Thus, if the current account comes as a surplus then the nation’s international net asset increases also while deficit will decrease the international net asset.

A good trade surplus is achieved when a country exports products more than buying imported goods. A trade deficit is eventually experience as a result of the opposite of a trade surplus. The trade balance is alike to the difference of a country's output and the domestic demand. These factors may affect the trade balance: prices of goods manufactured, taxes and tariffs, trade agreements, business cycle (home or abroad), and exchange rates.

The trade balance is different in many business cycles. For instance, export growth like oil and industrial goods which improves when there is economic expansion.

In developed countries like; Japan, China and Germany usually run at trade surpluses in which they experience a higher savings rate. Around the world there are different natural resources which a country may have for instance, countries from the coastal regions are major producers of fish, Canada can be a major producer of lumber because of its huge forests while in the Middle East, has the most oil reserves.

International trade is important so in order to sustain the balance of trade. A country should be totally self sufficient without international trade. Through international trades, each country will have the opportunity to produce specialize goods efficiently. In relation, when a nation specializes in producing these goods, the total production increases instead of trying to be self sufficient. Nations will benefit from international trades and also meets their needs. Generally, nations will trade to other nations when they gain from the trade. But the gains are not usually equal in terms of benefits and profit.

Crown Forex - Technical Analysis for SILVER

Silver respected our previous reports in which we expected this upward move which breached the Fibonacci expansion level at 13.60 (check previous report here)based on lots of bullish signals as shown on the above chart. The most important point now is the daily close which we need to watch it carefully. A clear close with stability above 13.88 areas will push silver to incline in the medium term towards 16.00-16.50 areas. The trading range for today is among the key support at 12.95 and key resistance now at 14.70. The general trend is to the upside as far as 12.00 remains intact with targets at 16.50.

Global forex volatility to continue in 2009 -Teva CFO

TEL AVIV, Feb 17 (Reuters) - Teva Pharmaceutical Industries' (TEVA.O: Quote, Profile, Research) chief financial officer said on Tuesday that global exchange rate volatility, which impacted its 2008 earnings, looks to continue in 2009.

"We are not great forecasters of exchange rate movements but it doesn't look like it has calmed down and we expect to see continued volatility in 2009," Eyal Desheh, Teva's CFO, told a news conference.

Teva (TEVA.TA: Quote, Profile, Research), the world's largest generic drugmaker, said exchange rate differences negatively impacted its fourth-quarter financial results by about 5 percent while positively impacting sales by 2 percent for all of 2008.

Desheh also forecast the rate of leverage will drop to 25 percent at the end of 2009 compared with 27 percent at the end of 2007. It rose to 34 percent by the end of 2008 due to the $7.46 billion purchase of Barr Pharmaceuticals that required higher debt to finance the acquisition.

"We forecast that at the end of 2009 in terms of leverage we will return to where we were before we bought Barr," Desheh said, explaining that debt will fall this year due to strong cash flow, debt redemption and an increase in equity.

Effective Date of Amendments to Forex Requirements

NFA has received notice that the Commodity Futures Trading Commission has approved changes to NFA Bylaws 306 and 1507; Compliance Rules 1-1, 2-36, and 2-39; Code of Arbitration Section 1; Financial Requirements Sections 1, 11, and 12; and the Interpretive Notice Regarding Forex Transactions. Most of these changes ensure that NFA has jurisdiction over leveraged off-exchange foreign currency contracts when NFA Members act as counterparty to, solicit or introduce, or manage accounts on behalf of retail customers. The remaining changes are technical amendments that clarify the existing forex requirements. All of these amendments became effective on February 13, 2007.

The amendments adopt a new section (b) to Bylaw 1507 to define "forex" as any leveraged off-exchange foreign currency transaction offered to customers who are not eligible contract participants. The definition does, however, contain a limited exclusion for transactions that either 1) result in actual delivery within two days or 2) create an enforceable obligation to deliver between a buyer and seller who have the ability to fulfill that obligation in connection with their line of business (e.g., bona fide hedging activities). The amendments also incorporate this definition into NFA's other forex requirements by reference, eliminate language made superfluous by the new definition, and revise the introductory language to the Interpretive Notice to make it consistent with this definition.

Finally, the Board adopted several technical changes to the existing forex requirements. Those changes:

- Clarify that Compliance Rule 2-39 applies to Associates soliciting or managing forex accounts even when those activities are not conducted on behalf of an NFA Member;

- Clarify that the concentration charge includes customer positions;

- Modify current footnotes 5 and 13 of the Interpretive Notice to conform to Compliance Rule 2-39;

- Clarify that Forex Dealer Members are responsible for all their forex affiliates, including assuring that those affiliates do not engage in forex transactions unless they are authorized to do so under the Commodity Exchange Act; and

- Make a technical amendment to Financial Requirements Section 12 to update a rule reference.

NFA's November 13, 2006 submission letter to the CFTC contains a more detailed explanation of the changes and includes a copy of the forex requirements with the amendments marked. You can access an electronic copy of the submission letter through this link:1 National Futures Association | News Center

Questions concerning these changes should be directed to Michael Piracci, Senior Attorney (mpiracci@nfa.futures.org or 312-781-1419) or Kathryn Camp, Associate General Counsel (kcamp@nfa.futures.org or 312-781-1393).

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Free trade is Nepal’s passport to prosperity

Trade is essential for Nepals survival. But Nepal must do more than survive, it needs to prosper.And to prosper quickly there is really no other way than to let trade flourish freely.

Some 600 years ago, the city of Bhaktapur, straddling the trade route from Tibet, was the most important business centre in the valley of Kathmandu. Here caravans from Tibet found a bountiful welcome awaiting them at Bhote Bahal. The people of Bhaktapur treated the traders to feasts in which aila flowed like water, and put them in the right frame of mind for trade negotiations. Bhote Bahal still stands in Bhaktapur and there are other Bhote Bahals in Kathmandu and Patan which bespeak the trade origins of Nepal. Being landlocked, trade continued to flourish. By the middle of the 20th century there were "shutter" merchants who had one pull-down door to their shops displaying a variety of goods from Tibet, India and even Czechoslovakia, from where came the "pote" beads so loved by Nepali women. Until very recently Nepal was entirely trade-oriented, and it must get back to the days when trade was given the priority it deserved. The problem has been that it is illegal businesses that have been allowed to grow at the expense of manufacturing and legitimate trade.

Exports are the only way to pay for imports. And Nepal has to import just about everything: it is imported petrol which keeps Nepal's transport system running and imported planes provide domestic air transport. Imported computers allow us to take advantage of the Internet, imported cosmetics and electronic consumer goods allow us to enjoy the finer things in life. These imports cannot be financed unless there is money from exports to buy them with. For a small, landlocked country like Nepal, trade is everything. Bigger countries like India or the United States don't really have to be that dependant on trade, but Nepal must learn from city-states like Singapore which have transformed themselves have into hubs for global trade and prospered dramatically. Nepal has to, indeed Nepal must, specialise in manufacturing what it is best at, from handicrafts or pashmina shawls to software and microelectronics.

You then use the proceeds to buy anything else you need. Closed-door hermit policies will only turn Nepal into a North Korea. What we need is a trading system that builds on Nepal's natural advantages. Trade is essential for Nepal's survival. But Nepal must do more than survive, it needs to prosper. And to prosper quickly there is really no other way than to let trade flourish freely. To achieve this the government must remove all restrictions on trade. There could be a worry:

won't we run out of dollars if we keep on importing? What about foreign exchange requirements? But that is a problem only because the government micromanages foreign exchange. What it should do is leave the people to fend for themselves. Let all foreign currency transactions be freed from government control: let the market decide. If I want to import, let me arrange my own foreign exchange. Similarly, if I am an exporter let me dispose off of my exchange in the manner I like. Let the government step aside and let businessmen fill the void. If that happens, Nepal's trade will bloom: and everyone will benefit, not just those who benefit from keeping trade restricted. When people find that they can import anything they will also realise that this alone is not enough. They must possess the dollars, the yens, the hard currency required. This extra demand for foreign exchange will be an automatic incentive for people to earn it and trade both ways: exports as well as imports. This will lay the seeds of prosperity.

Indeed, Nepal has few other options. Come April 2001, the final phase of India's agreement with WTO will come into effect. With this, India will have no quantitative restriction left on imports: no items will be on the banned or restricted list. Also India's customs duties are now far below what they were a few years ago.

Under the circumstances Nepal can no longer import for export to India with its present import regime and duty structure. It must, therefore, remove restrictions and eliminate or substantially reduce all customs duties if it is not to be marginalised. To remain attractive to businessmen and foreign investors, and to generate employment, Nepal must be less restrictive and less taxed than India. After all India has the additional attraction of being a huge market, and this has to be compensated for somehow by Nepal. If Nepal plays its cards right, there is no cause for worry. It is up to Nepal to seize this opportunity knowing that it is in good company. Country after country has prospered from free trade, low duties and a liberal economic environment.

Whether it is Singapore,Hongkong, or the United States, the formula is the same. Remove restrictions, eliminate or reduce taxes and watch the country's businessmen do the rest. There is every reason to believe that Nepal will be no different. The moment is now. Free Nepal's trade, eliminate taxes and watch this \'kingdom of the gods' be blessed with unimaginable prosperity.

Forex Trading Glossary

Arbitrage: Simultaneous purchase of cash commodities or futures in one market against the sale of cash commodities or futures in the same or a different market to profit from a discrepancy in prices. Also includes some aspects of hedging.

Bar Chart: A charting method which consists of four significant points: the high and the low prices, which form the vertical bar, the opening price, which is marked with a horizontal line to the left of the bar, and the closing price, which is marked with a little horizontal line to the right of the bar.

Bank Notes: Paper issued by the central bank, redeemable as money and considered to be full legal tender.

Base Currency: The currency in which the operating results of the bank or institution are reported.

Base Price: One hundredth of a percentage point. 50 basis points [50bp] is half a percentage point.

Bear Call Spread: A spread designed to exploit falling exchange rates by purchasing a call option with a high exercise price and selling one with a low exercise price.

Bear Put Spread: A spread designed to exploit falling exchange rates by purchasing a put option with a high exercise price and selling one with a low exercise price.

Bid-Offer Spread: The difference between the buy (bid) and sell (offer) price of a currency or financial instrument.

Breakaway gap: A price gap which occurs in the beginning of a new trend, many times at the end of a long consolidation period. It may also appear after the completion of major chart formations.

Break-Even Point: The price of a financial instrument at which the option buyer recovers the premium.

Buying Rate: Rate at which a bank is prepared to buy foreign exchange. Also known as the Bid Rate.

Buying Selling FX: Buying and selling in the foreign exchange market always happens in the currency which is quoted first. "Buy dollar/mark" means buy the dollar/sell the mark. Traders buy when they expect a currency's value to rise and sell when they expect a currency to fall.

Closed position: A transaction which leaves the trade with a zero net commitment to the market with respect to a particular currency.

Cross-Rate: The exchange rate between two currencies, e.g., Yen / USD.

Currency: The type of money that a country uses. It can be traded for other currencies on the foreign exchange market, so each currency has a value relative to another. If one US dollar can buy 1.55 Deutschmarks, then one Deutschmark can buy 0.65 US dollars.

Gap: The price Gap between consecutive trading ranges ( i.e. the low of the current range is higher than the high of the previous range)

GTC: Good-Till-Cancelled. An order left with a Dealer to buy or sell at a fixed price. The GTC will remain in place until executed or cancelled.

LIBOR: London Interbank Offer Rate. The interest rate that the largest international banks will lend to each other.

Lagging Indicator: A measure of economic activity which tends to change after change has occurred in the overall economy e.g. CPI.

At-the-Money: When an option's exercise price is the same as the current trading price of the underlying commodity, the option is at-the-money.

In-The-Money: A term used to describe an option contract that has a positive value if exercised. A call at $400 on gold trading at $10 is in-the-money 10 dollars.

Limit Order: An order to buy at or below a specified price or to sell at or above a specified price.

Long position: When one buys a currency, their position is long.

Margin Call: A requirement from a broker or dealer for additional funds or other collateral to bring the margin up to a required level to guarantee performance on a position that has moved against the customer.

Margin Trading: Foreign exchange trading is normally undertaken on the basis of margin trading. A relatively small deposit is required in order to control much larger positions in the market. This is possible because when you buy one currency you sell another. Margin requirements are set by your Customer broker and vary from as little as 1% to 10% margin. This means that in order to trade 1,000,000 USD on 1 % margin, you need to place just 10, 000 USD by way of security. That same security of 10,000 USD, traded on a 10% margin could control up to 100,000 USD bought or sold against another currency

Market Maker: A dealer who supplies prices and is prepared to buy or sell at those stated bid and ask prices. A market maker runs a trading book.

Market Order: An order to buy/sell at the best price available when the order reaches the market.

One Cancels Other Order (O.C.O. Order): A contingent order where the execution of one part of the order automatically cancels the other part.

Out-Of-The-Money: A term used to describe an option that has no intrinsic value. For example, a call at $400 on gold trading at $390 is out-of-the-money 10 dollars.

Pips (Basis points) Refers to the last decimal place of a quotation.

Risk Capital: The amount of money that an individual can afford to invest, which, if lost would not affect their lifestyle.

Short: To go `short` is to have sold an instrument without actually owning it, and to hold a short position with expectations that the price will decline so it can be bought back in the future at a profit.

Short position: When one sells a currency, their position is short.

Spread: The difference between the bid and offer (ask) prices; used to measure market liquidity. Narrower spreads usually signify high liquidity.

Stop Order: An order to buy/sell at an agreed price. One could also have a pre-arranged stop order, whereby an open position is automatically liquidated when a specified price is reached or passed.

Overbought: A technical opinion that the market price has risen too steeply and too fast in relation to underlying fundamental factors. Rank and file traders who were bullish and long have turned bearish.

Oversold: A technical opinion that the market price has declined too steeply and too fast in relation to underlying fundamental factors. Rank and file traders who were bearish and short have turned bullish.

FOK (Fill or Kill Order): An order which demands immediate execution or cancellation.

Spread (or Straddle): The purchase of one futures delivery month against the sale of another futures delivery month of the same commodity; the purchase of one delivery month of one commodity against the sale of that same delivery month of a different commodity; or the purchase of one commodity in one market against the sale of the commodity in another market, to take advantage of a profit from a change in price relationships. See also Arbitrage, Switch. The term spread is also used to refer to the difference between the price of a futures month and the price of another month of the same commodity. A spread can also apply to options.

Warrant: An issuer-based product that gives the buyer the right, but not the obligation, to buy (in the case of a call) or to sell (in the case of a put) a stock or a commodity at a set price during a specified period.

Forex Trading Tips

The following crucial free Forex Trading Tips are good to remember in every Forex trade you make.


- Take responsibility for your capital.
- Cut your losses and let your Profits Run.
- Have a Disciplined Plan.
- Keep your trading simple.
- Do not stay with a losing trade.
- Do not overtrade.
- Take responsibility for your capital.

Fact: It is always easier for people to place their savings and funds in other peoples hands, accept the losses as its easier to blame someone else than to take responsibility of those funds themselves.
The first step as a trader is believing in yourself and your own capabilities. One of the most startling discoveries when you start trading is how many “experts” get it so wrong so often – just listen to them after funds are lost! Self confidence comes by itself when you begin to understand that with a solid background and good knowledge, discipline and a well defined trading plan that you will often outperform many expert traders.

Fact: The Forex market moves several times faster than any other market and with leverage, the rewards and losses compound many times. The best way to overcome the thought of using your own money and the volumes (Lots) you will be trading is to forget about “money” and talk in terms of points. Important: Rather than calculate your profit and losses in terms of “dollars” think in terms of gains and losses in “points”. Adopt this view very early in your trading!

When starting out trading a demo account most start-up traders normally do quits well. They trade without fear because there is no “real” money to lose. As soon as its “real” money, they suddenly find themselves trading in a manner where they miss many opportunities and accumulate many losses. Simply put they loose their nerve and give into fear or greed. Try to trade without the thought of how much money you may gain or loose. Important: Trade thinking of points, even if you are trading a demo account.

Cut your losses and let your Profits Run.

This concept is one of the most difficult to implement and is the cause of most traders going into losing trades. Stay with your original trading plan, most traders do not keep to their predetermined plan and take their profits before reaching their profit target because they feel uncomfortable sitting on a profitable position.

These same traders will easily sit on losing positions, allowing the Forex market to move against them in the hope that the market will come back. In addition, traders who have had their stops hit a few times only to see the market go back in their favour once they are out, are quick to remove stops from their trading on the belief that this will always be the case. Stops are there to be hit, and to stop you from losing more money then your predetermined plan!

If you can get 3 out of 6 trades to be profitable then you are doing well. How then do you make money with only half of your trades being winners you ask yourself? - You simply allow your profitable trades to run and make sure that you cut your losses very, very early.

Note: A good Forex trading tip and Forex trading strategy is to move your stop losses (the point the trade will be sold if it goes the wrong way) behind the trade to a level where a pull back can be accommodated but a reversal will lock in at least some profit.

Have a Disciplined Plan

Trade with a disciplined Plan. The problem with many traders is that they take shopping more seriously then trading. The average shopper would not spend $1000.00 without serious research and examination of the product he is about to purchase, yet the average trader would make a trade that could easily cost him $1000.00 based on little more than “gut” feeling. Ensure that you have a plan in place before you start trading. The plan must include stop and limit levels for the trade, as your analysis should include the expected downside as well as the expected upside.

Keep your Trading simple

It is important to keep your trading simple. Many traders start out with a simple strategy that is successful but find themselves chopping and changing trying to find a better system. They allow themselves to be influenced by others opinions and too much fundamentals. Many traders who have done this have been surprised that their kids can actually trade well, consistently and often with spectacular results.

The lesson is that they don’t stray from the rules and are not influenced by other sources like the media or fundamentals. Many Forex traders pay no attention to fundamentals at all and trade quite successfully. The rule here is to keep it simple, don’t allow yourself to become confused with too much information and if you’re not sure or not in the right emotional frame of mind, don’t trade the Forex!

Do not stay with a losing trade

The reason trading with a plan is so important, is because most objective analysis is done before the trade is actually executed. Once a trader is in a position they tend to analyze the market differently in the “hope” that the market will move in a profitable direction rather than objectively looking at the changing factors that may have turned against your original analysis. This is especially true of losses. Traders with a losing position tend to marry their position, which causes them to disregard the fact that all tading signals point towards continued losses. Don’t take more trades in the hope that the market will turn in your favour; it will only accelerate your losses.

Do not over trade!

One of the most common trading mistakes that traders make is leveraging their account too high by trading much larger sizes than their account should prudently trade. Leverage is a double-edged sword. Just because one lot (100,000 units) of currency only requires $1000 as a minimum margin deposit, it does not mean that a trader with $5000 in his account should be able to trade 5 lots. One lot is $100,000 and should be treated as a $100,000 investment and not the $1000 put up as margin.

Most forex traders analyze the charts correctly and place sensible trades, yet they tend to over leverage themselves. As a consequence of this, they are often forced to exit a position at the wrong time. A good rule of thumb is to trade with 1-10 leverage or never use more than 5% of your account at any given time. Trading currencies is not for everyone go here to see if you will be a good trader.

Forex Trading FAQ

What is Foreign Exchange ?

1. Where is the central location of the FX Market ... ?
2. Who participates in the FX Market ... ?
3. When is the FX Market open for trading ... ?
4. What are the most commonly traded currencies in the FX Market ...
5. How are currency prices determined ... ?
6. How do I manage my risk ... ?

The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.5 trillion. Foreign Exchange is the simultaneous buying of one currency and selling of another. The world's currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.

FX Trading is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over the Counter (OTC) or 'Interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.

The Forex market is called an 'Interbank' market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes Huge multi-national corporations, global money managers, registered dealers, international money brokers, futures and options traders, and other private speculators.

A real-time 24-hour market, Forex trading begins each day in Sydney, Australia, and moves around the world as the business day begins in each financial center, first to Tokyo, then London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

The most often traded or most 'liquid' currencies are those of countries with stable governments, respected central banks, and low inflation. Today, over 85% of all daily transactions involve trading of the major currencies, which include the US Dollar, British Pound, Euro, and the Japanese Yen.

Currency prices are affected by a variety of economic and political conditions, most importantly interest rates, inflation and political stability. Moreover, governments sometimes participate in the Forex market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price. This is known as Central Bank intervention. Any of these factors, as well as large market orders, can cause high volatility in currency prices. However, the size and volume of the Forex market makes it impossible for any one entity to "drive" the market for any length of time.

The most common risk management tools in FX trading are the limit order and the stop loss order. A limit order places restriction on the maximum price to be paid or the minimum price to be received. A stop loss order ensures a particular position is automatically liquidated at a predetermined price in order to limit potential losses should the market move against an investor's position. The liquidity of the Forex market ensures that limit order and stop loss orders can be easily executed.

Country Assistance Plans

Economic Performance Assessment

1. Despite a series of development plans, and assistance from international aid agencies, Nepal's economic growth has barely kept pace with its expanding population. In FY2000, gross domestic product (GDP) per capita was less than $245, making Nepal one of the poorest countries in South Asia (economic, population, social and environmental indicators are provided in Appendix 1). Several structural factors hinder the country's attempts at development such as (i) the difficult terrain of a mountainous, landlocked country; (ii) heavy dependence on subsistence agriculture; (iii) low levels of physical infrastructure and human capital; (iv) low domestic resource mobilization and the consequent dependence on foreign assistance; (v) inadequate institutional capacity for development management; and (vi) poor governance.

2. Growth in total output, as measured by GDP at factor cost, reached 5.9 percent in FY2000, the highest annual growth rate in six years and about equal to the 6 percent growth rate projected under the Ninth Five-Year Plan (FY1998-FY2002). The higher overall growth was led by a recovery in agriculture, which grew by 5.0 percent compared with 2.7 percent growth in FY1999. The recovery in the agriculture sector is attributed to a favorable monsoon and wider usage of fertilizer, which led to a strong recovery during the first half of the current fiscal year. The industrial sector also performed well growing at 8.3 percent for the year, driven by an 11.8 percent expansion in manufacturing

3. Consistent with an economy that is dominated by agriculture, the labor force participation rate is high and the unemployment rate is low. About 86 percent of the population aged 15 and over is economically active, with 73 percent of them employed in agriculture1. The unemployment rate for the country as a whole is less than 2 percent, but the rate in urban areas is more than 7 percent. The rate of underemployment is, however, quite high. Another challenge is providing gainful employment to the additional 300,000 economically active population that enter the labor market every year.

4. Domestic revenue collection in FY2000 was substantially lower than budgeted, remaining at the previous year's level of less than 11 percent of GDP, although revenue collection increased by 21 percent compared to FY1999. The introduction of the value added tax (VAT) in November 1997 was meant to be the centerpiece of an overall tax reform. However, weak administration as a result of key vacancies in the VAT Department has delayed its full implementation, despite the Government's announced commitment to the full implementation of the VAT during the FY2000 budget speech.

5. The FY2000 budget deficit remained stable compared to FY1999, at 3.9 percent of GDP. This is because development expenditures were reduced in part to compensate for the revenue shortfall, which had the effect of making up for the poor revenue performance. Development expenditures rose by 17 percent, a significant improvement over the marginal decline the previous year, but far short of the 20 percent envisaged in the budget. Foreign grants and loans financed about 50 percent of development expenditures in FY2000. The dependency on foreign resources is expected to continue with foreign loans and grants again expected to cover 55 percent of budgeted development expenditures in FY2001.

6. Government military expenditures have declined over time in total, as a share of GDP, and in comparison to social expenditures. In 1985, $51 million was spent on defense, compared to $37 million in 1998. Defense expenditure as a percentage of GDP in 1998 decreased to 0.7 percent, from 1.5 percent in 1985, compared with the global average of 4.2 percent of GDP. Defense expenditure per capita also decreased in this period from $3 to $2, compared with $229 per person on average worldwide and $38 per person in South Asia2. Military expenditures as a percentage of combined health and education expenditures in Nepal contracted from 42 percent to 24 percent between 1985 and 1998. As a percent of total expenditures, military spending fell from 6.2 percent to 5.1 percent in this period.

7. The budget for FY2001 was presented to the Parliament in May 2000, two months earlier than in previous years. In his budget speech, the Finance Minister stated, "The foremost goal of our entire development endeavor and of this budget is to achieve the prime objective of poverty reduction as envisaged by the Ninth Plan." However, a focused poverty reduction strategy is not yet in place, but will be formulated in this fiscal year with ADB assistance. The budget has a total outlay of NRs82.4 billion ($1.2 billion) in FY2001, representing an increase of 35.8 percent over the revised estimate of NRs 60.7billion ($876 million) for FY2000. The fiscal deficit is expected to be about 5 percent of GDP. Development expenditures are projected to grow by 45 percent, to be financed mainly by foreign grants, which are projected to more than double. Domestic revenue estimates are also optimistic with a projected growth rate of 25 percent. The budget speech also emphasized the need for raising the efficiency of the civil service and calls for a freeze on hiring until after the completion of restructuring of ministries. However, increases in civil service salaries will be implemented before the restructuring, putting more pressure on scarce domestic resources in the short run. Financial sector reform and private sector development also feature prominently within the budget statement.

8. Broad money (M2) increased by about 22 percent in FY2000 compared with 21 percent in the previous year. The influx of foreign assets and growth in domestic credit to the private sector generated the increase in the money supply. Money growth is somewhat high given projections for GDP growth and inflation, but the comfortable foreign exchange reserve position means the current peg with the Indian rupee is sustainable. Because of the relatively open border and the exchange rate peg to the Indian rupee, inflation in Nepal generally follows India's inflation rate. Inflation was a low 3.3 percent in FY2000, compared to the 11.3 percent increase in prices during the previous year. The increased agricultural production due to favorable weather throughout South Asia kept the prices of food items in check. The slower growth in food prices-which increased by only 1 percent on average in Nepal-helped to counteract rising fuel, electricity, and water prices. Given a favorable monsoon, Nepal should continue to experience relatively moderate inflation.

9. As in the previous year, Nepal experienced a slight current account deficit in FY2000. The dollar value of imports expanded by 20 percent with aid-related imports recovering from the contraction of the previous year. However, strong export growth, particularly to India, led to a current account deficit of only 4.5 percent of GDP. By the end of FY2000 Nepal had $981 million in foreign exchange reserves, an increase of 24 percent over the previous year, and enough to cover about 6 months of imports. External debt as a percent of GDP had been rising, but the trend has reversed itself in the last two years. At the end of FY2000, external debt was less than 48 percent of GDP, compared with the nearly 51 percent of GDP in FY1999. The debt service ratio has also fallen and, due to the concessional nature of Nepal's external debt, was at a manageable level of 5.3 percent of exports during the year.

10. Macroeconomic indicators published by the Nepal Rastra Bank for FY2000 show an increase of 16 percent in domestic revenue collection compared to FY1999, but rising expenditures (15 percent). Foreign grants increased by 21 percent and substantially financed the budget deficit, which remained stable at 3.9 percent of GDP. Foreign trade surged in FY2000, with exports growing by 42 percent and imports by 20 percent in rupee terms compared to FY1999. Foreign exchange reserves of the overall banking system remained sound at almost $1.0 billion, enough to cover about six months of imports. The rate of inflation declined to 3.3 percent during FY2000 compared to 11.3 percent in FY1999.

11. While the country has been moving toward a more market-oriented economy since the early 1990s, frequent changes in government have hampered the implementation of policy reforms and delayed the implementation of development projects. The majority government elected in 1999 raised expectations of reform, but progress to date has been limited. The increase in VAT registrations is a promising sign, but key vacancies in the VAT department need to be filled soon to improve administration, clear the filing backlog, initiate collection visits, and intensify audit activity. These changes are necessary if the Government is to achieve its ambitious revenue target. The Government also recently raised prices of kerosene, diesel, and electricity and removed all subsidies on fertilizer. Despite vocal public protests against these measures and a special parliamentary session called by the opposition to review the price increases, the Government has so far stood firm in its decisions. However, if the country is to achieve the levels of sustained growth necessary to lift it out of its poverty, the Government needs to take advantage of its majority position to pursue a broad-based reform agenda, with financial sector reform and governance reform forming the core of this agenda. Reform in these areas will require sweeping changes to the financial and governance architecture and the way in which business and government is conducted in Nepal. To remedy the serious defects in the financial and governance environment, and to implement the reforms in a sustainable manner will require a high level of commitment and ownership by the Government and concerned stakeholders.

Foreign Exchange Rates For May 11, 2006 In Nepal

The foreign exchange rates for May 11, 2006 as fixed by Nepal Rastra Bank are as follow:

Applications of the indicators

To start with, the Kumo (or most people call it cloud) is getting more popular among chartists to identify support and resistance area. When price is trading above the Kumo, the prevailing trend is said to be up and the Kumo will be treated as the support area whilst if price is below the Kumo, the trend is said to be down and the cloud will become resistance area instead.

If the price is below the Kumo (cloud), the lower line (i.e. the Senkou Span A) acts as the first resistance level, and the upper line (i.e. Senkou Span B) becomes the second resistance level.

If the price is above the cloud, its upper line (i.e. the Senkou Span A) acts the first support level, and the lower line (i.e. the Senkou Span B) becomes the second support level.

One more thing is that the thickness of the Kumo (cloud) also indicates the market volatility. A thin layer of cloud implies the current volatility is low whilst a thick cloud implies increasing volatility.

The applications of the 2 lines - Tenkan-Sen and Kijun-Sen are quite similar to moving average studies, buy and sell signals are generated when short-term line (Tenkan-Sen) crossover the longer-term line (Kijun-Sen).

A buy signal is generated when the Tenkan-Sen crosses above the Kijun-Sen from below. On the other hand, a sell signal is generated when the Tenkan-Sen crosses below the Kijun-Sen from above. However, one clear advantage of using Ichimoku Kinko over the moving average crossover is that the area where the Tenkan-Sen crosses the Kijun-Sen will dictate the relative strength of that buy/sell signal.

If a buy signal (i.e. the Tenkan-Sen crosses above the Kijun-Sen from below) happens above the Kumo (or cloud), this would be considered as a very strong buy signal as the cloud is representing support / resistance area.

Similarly, if a sell signal (i.e. the Tenkan-Sen crosses below the Kijun-Sen from above) occurs below the cloud, this would be considered as a very strong sell signal. If the buy/sell signal occurs inside the Kumo (or cloud), this signal will be treated as normal.

Finally, if the buy signal happens below the cloud, it will be viewed as a weak signal whilst if the sell signal occurs above the cloud, it will be treated as a weak signal also.

Guide to Ichimoku Analysis in Forex Trading

First of all, the Japanese word "Ichimoku" means "one glance", "Kinko" means "balance / equilibrium and "Hyo" means "chart", in short Ichimoku Kinko means to see the equilibrium at a glance. Basically, the indicator is best used to define market trend, support and resistance and finally generate buy/sell signals.

Ichimoku Kinko Hyo consists of 5 lines and a "Kumo" or known as "cloud" as most people call it, they are:

1. Tenkan-Sen (Conversion Line) -- (Highest High + Lowest Low)/2, for the past x periods (Traditionally x=9)
2. Kijun-Sen (Base Line) -- (Highest High + Lowest Low)/2, for the past y periods (Traditionally y= 26)
3. Chikou Span (Lagging Span) -- Today's closing price plotted y periods behind
4. Senkou Span A -- (Tenkan-Sen + Kijun-Sen) / 2, plotted y periods ahead
5. Senkou Span B -- (Highest High + Lowest Low) / 2, for the past z periods, plotted y periods ahead (z = 52)

The space between the Senkou Span A and Senkou Span B is known as the Kumo or the cloud.

Forex Majors

Preventing the Counterfeiting of the U.S. Dollar

In recent years, advanced copying technologies have helped raise the incidence of counterfeiting of the U.S. dollar. As the quality and sophistication of reproduction technology improves, the sophistication and complexity of our currency notes need to improve as well. As a result, the United States government has been adding advanced security features to our paper money, in addition to anticipating the enhancement of the design of the currency every 7-10 years. These changes are the first major design changes to take place for the U.S. currency since 1928.

In the early 1990s, the three most important and easy to check security features were added to the U.S. currency: the watermark, the security thread, and the color shifting ink. These security features are still in use today and continue to be extremely effective in detecting counterfeit money. The most recent change in the design of the currency is the addition of color. The new color of the money is thought to be safer, smarter, and more secure. The most recent bill to be entered into circulation with this new color was the $10 bill on March 2, 2006.

Overall, counterfeiting of U.S. currency remains extremely low. This is due primarily to the combination of improvements in the notes' security features as mentioned above, aggressive law enforcement, and educational efforts to inform the public about how to verify their currency. According to statistics, the amount of counterfeit U.S. currency worldwide is less than one percent of genuine U.S. currency in circulation.

Most recently, the government has detected a pattern of which counterfeiters bleach the ink off of the $5 bills, and then print counterfeit $100 bills on the paper. This is especially deceiving to the public because of the similar placement of security features on the bills. In response to this, the government has decided to redesign the $5 bill in an attempt to ensure that this problem does not continue into the future.

The best way the public can protect themselves from counterfeit currency is to know the different security features to look for in authentic U.S. currency. The government will continue their worldwide public education program to raise awareness of changes to the U.S. currency and help to protect our money.

Forex Trading Resources

The forex market allows you to buy and sell currencies similar to how you would stocks or commoditities. Foreign exchange trading, or forex for short, is the largest market in the world involving over $2 trillion in daily trading volume . Forex, like commodities trading, is a regulated industry. Forex companies in the US need to be registered with the CFTC and are policed by the NFA. Learning more about this market can seem overwhelming to those new to currency trading, but with the right resources learning to trade forex online can be a lot easier. Online Forex Trading educational resources can be found several places like:

- DailyFX.com which has news articles, free charts and trading signals
- FXCMEspanol has spanish language resources like free practice accounts
- Yahoo Finance is also a great resource for international articles
- Forex Tools and reviews can also be found to help new traders find what is best for them
- FXCM has English language forex resources

There are also several forex courses available from a variety of companies that teach you the basics of trading. We also offer a forex for beginners article that provides more details about how to get started trading forex online. Many traders often jump right into currency trading with a free forex practice account . From there, there are several free charting and news sources available. Remember, there is risk involved with forex trading and only descretionary income should ever be used.

Online Investing And Forex Trading

Online trading has caused a major paradigm shift in investing. At the turn of the millennium, there are over 6 million online investment accounts, up from 1.5 million in 1997. As a result, start-up firms now compete directly with financial institutions to serve investors in the new Economy, and the clear winner is the customer. The competition between the brick and mortar institutions and the Internet-based companies has dramatically lowered the costs of investing, and empowered the individual investor to take control of their own investment strategy.

On-line trading will revolutionize the currency markets by making it accessible to the small and medium sized investor. For the first time, these investors have the ability to execute transactions of between $100,000 and $10,000,000 at the same prices the Interbank market offers for deals well over $10,000,000. This benefits both those who wish to speculate on the direction of the currency markets for profit, as well as the money manager or corporate treasurer looking to hedge against unwanted exposure to future price fluctuations in the currency markets. I am going to discuss the Benefits of Trading Forex.

Very few on-line brokers are able to offer their clients real-time bid/ask quotes, which facilitates instantaneous deal execution - no missed market opportunities. Real-time prices also allow investors to compare an on-line broker’s dealing spread with that of other pricing services, to ensure they are receiving the best possible price on all their Forex transactions.

Many on-line Forex brokers require their clients to request a price before dealing. This is disadvantageous for a number of reasons, primarily because it significantly lengthens the execution process from just a few seconds to possibly as long as a minute. In a fast paced market, this could make a significant difference in an investor’s profit potential. Also, some of the more unscrupulous brokers may use the opportunity to look at an investor’s current position. Once they have determined whether the investor is a buyer or a seller, they ’shade’ the price to increase their own profit on the transaction.

Timing is everything in the fast-paced Forex market. On-line trades are executed and confirmed within seconds, which ensures that traders do not miss market opportunities. Even the incremental extra time it takes to complete a transaction over the phone can mean a big difference in profit potential. Introduction simply, executing trades electronically reduces manual effort, thereby lowering the costs of doing business. On-line brokers are then able to pass along the savings to their client base. The fast-paced nature of the Forex market compels traders to execute multiple trades each day. It is vital for each client to have real-time information about their current position in order to make well-informed trading decisions.

Access to timely and relevant information is critical. Professional traders pay thousands of dollars each month for access to major information providers. However, the very nature of the Internet affords users free access to reliable market information from a variety of sources, including real-time price quotes, international news, government-issued economic indicators and reports, as well as subjective information such as expert commentary and analysis, trader chat forums etc.

The main advantage of the Forex market over any exchange-traded instruments is that the Forex market is a true 24-hour market. Whether it’s 6pm or 6am, somewhere in the world there are always buyers and sellers actively trading Forex so that investors can respond to breaking news immediately. In the currency markets, your portfolio won’t be affected by after hours earning reports or analyst conference calls. The ECNs (Electronic Communication Networks) exist to bring together buyers and sellers when possible.