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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