The (Foreign Exchange) Forex Trading Market Explained.



Successful FOREX trading requires more than just being a average FOREX trader

There are many tools available to the FOREX trader for analyzing the market as well as for buying and selling currencies.  Software tools are a necessary part of FOREX because of its volume and volatility.  Software can be used to automate some of the trading procedures and safeguard against losses.

In order to make rational, successful trades, the FOREX trader needs information – lots of information.  Current exchange rates are the tip of the iceberg – the trader needs historical data as well as current information about political and economic conditions that could affect currency prices.  All this information is provided by many FOREX brokers on their web sites.

Successful FOREX trading relies on making accurate assessments of current political and economic conditions.  Being able to predict whether a currency will fall or rise against another currency allows the FOREX trader to profit from currency movements.

There are two basic trading methods for buying and selling currencies.  Reactive trading means the trader responds to changes in the political or economic climate.  Speculative trading means the trader makes buying decisions based on predictions on how the market will respond to current events.  While most FOREX trading is speculative, both types of trade require up-to-the-minute information and an analysis of current and historical conditions. 

Traders rely on both fundamental and technical analyses.  Fundamental analysis is based on news information about political conditions, economic policies, trade patterns, interest rates and unemployment rates.  Technical analysis relies on historical charting to identify trends and patterns over time.  Information needed for both types of analyses is available in real time on the Internet.  Most online brokers offer live news feeds and streaming rates for observing minute by minute changes in the market.

All this information can help you decide which currencies to buy.  More tools are available to help you minimize your risk and maximize your profits.

The Risk Probability Calculator (RPC) can be used to identify trades that have more potential gain than potential loss.  The RPC can also help you target exit points to end the trade.

Pivot Points can be used to predict movements of currency prices.  They are calculated as an average of the currencies high, low and closing prices.  Pivot Point Calculators tell you whether prices fall in the normal trading range or extreme trading ranges.

Pip Value Calculators are used to tell you the value of each pip (smallest currency unit) according to various sized lots.  Pip calculators can tell you the actual profit or loss that will result from movements in the FOREX.

Once a trader has decided which currency pair to trade, he logs on to his online account provided by his broker.  The desired currency pair is entered and the current exchange rate appears on the screen.  The amount of the trade is entered (how much currency you wish to buy).  Some brokers may give you the option of specifying the amount you wish to risk.  This automatically enters a 'stop loss rate' into your order.

After the details of the trade are entered, you will be taken to a confirmation screen where you can accept the current price on screen.  You may be given the option of 'freezing' the quoted price, meaning the price of your transaction is exactly what you see on screen without any slippage.  Accept the rate and your deal is running.

Just as you can enter a 'stop loss rate' to automatically sell the currency if it falls below a certain rate, you can enter a 'take profit rate' to automatically sell the currency when it reaches a certain level.  If you don't enter a 'take profit rate' you need to monitor the movement of the currency to decide when to close the deal and take either your profits or your losses.




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Introduction to Online Forex Trading
Current Forex Currency Rates
Forex Trading
How to Get Started In FOREX Trading
FOREX versus Futures Market
FOREX versus Stocks
FOREX Trading Philosophy
Fundamental Analysis In Forex Trading
Forex Technical Analysis - Part 1
Forex Technical Analysis - Part 2
FOREX Trading Strategies
Trading Currencies on Margin
Currency Option Marketplace
FOREX Signals
How to Read FOREX Quotes
Calculating FOREX Profits and Losses
Risks of FOREX Trading
FOREX Training
FOREX Trading Software
FOREX Brokers
FOREX Glossary
Forex Updates and Training
Crash Course in Forex Education
How to Recognize Patterns in Forex Trading Markets
Defining Exotic Currencies and Their Impact on Forex Markets
Defining Trading Trend and Ranges in Forex Trading
Mind Games – The Psychology of Forex Market Trading
Crossing Currency - What’s This Mean to Forex Traders
Money Management Basics for Forex Traders
Choosing Your Forex Broker
Expensive Beginner Forex Trader Mistakes
The Elliott Wave Theory for Forex Markets
Failsafe Facts to Guarantee Failure in Forex Trading
Five No Nonsense Strategies in Forex Trading
Global Expansion and It’s Reaches within the Forex Market
Hedging in the Forex Market
The Important Ways to Keep From Losing in the Forex Markets
An Overview of the Euro’s Performance in the Forex Markets
Six Trading Tips for the Forex Newbie
The Lowdown on Day Trading
Interpreting How Interest Rates Drive the Foreign Exchange Markets
The Basics of the Bollinger Band Technical Indicator in Forex Markets
Relative Strength Analysis in Forex Trading
The Basics on Understanding Forex Options
Forex Charts – What Are They and How Do You Read Them
Interpreting the Future of the Oil Marketplace and How It Affects Forex Trading
Top Five Economic Indicators that Drive Forex Trading
Rules for Trading in Forex Markets
How Does the Japanese Yen Stack Up Against the US Dollar in Forex Markets
Pivot Points in Forex
The Ins and Outs of Trying Out a Forex Demo Account
The Top Currencies to Watch in the Forex Trading Game
Defining Moments Regarding Trading Trends and Ranges with Forex
Top Ten Basic Terms in Forex Trading and Their Definitions
Forex Folklore Investment Myths in the Market
Five Economic Driving Forces that Influence Forex Trading
Day Trading All You Wish You Did Not Have to Know
Time line for Daily Forex Trading When are the Optimum Moments
Forex Relative Strength Analysis
How Forex Quotes Can Influence your Trading Tactics
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