THE 2 BASIC FOCASTING METHODS IN FOREX MARKET

The 2 basic forcasting methods in forex market are:

1. Technical analysis and
2. Fundamental analysis.

1. TECHNICAL ANALYSIS: 

Technical analysis or chart reading, is a method of predicting price movements and future market trends by studying charts of past market action.

Technical analysis is concerned with what has actually happened in the market, rather than what should happen and takes into account the price of instruments and the volume of trading, and creates charts from that data to use as the primary tool.

Many traders consider technical analysis to be somewhat of an art form that anyone can master with a little time and practice.

When most people think about trading forex, they think about watching price movements flash by them on the charts and making money as they jump in and out of profitable trades.

This is where traders show whether or not they have what it takes to be successful in forex market.

Fundamental analysis helps you determine whether you should trade a particular currency pair while technical analysis helps you determine when you should buy or sell that currency pair.

Technical analysis is built on three essential principles:

a. Market action discounts everything:

 This means that the actual price is a reflection of everything that is known to the market that could affect it.

The pure technical analyst is only concerned with price movement, not with the reasons for any changes.

b. Price move in trends:

Technical analysis is used to identify patterns of market behavior that have long been recognized as significant.

For many given patterns there is a high probability that they will produce the expected results. Also, there are recognized patterns that repeat themselves on a consistent basis.

c. History repeats itself:

Forex chart patterns have been recognized and categorized for over 100 years and the manner in which many patterns are repeated leads to the conclusion that human psychology changes little over time.

2. FUNDAMENTAL ANALYSIS: 

Fundamental analysis is a method of forcasting the future price movements of a financial instrument based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlines the financial instrument.

The key to making money in the forex is understanding what makes currency pairs move.

Ultimately, it is investors who make currency pairs move as they buy and sell different currencies, but these investors buy and sell for a reason.

Either they see something happening fundamentally in the global economy that makes them believe a currency is going to get stronger or they see something happening fundamentally that makes them believe a currency is going to get weaker.

In other words, they watch the fundamentals and make their decisions according to what they see.

Fundamentals make currency pairs move. If the economic fundamentals in the United States are improving, the U. S. dollars (USD) will most likely be getting stronger because forex investors will be buying dollars.

Conversely, if the economic fundamentals in the United States are declining, the U. S. dollar will most likely be getting weaker because forex invrstors will be selling dollars.

You can learn to watch the fundamental economic indicators that move currency pairs just like institutional investors do.

In practice, many market players use technical analysis in conjunction with fundamental analysis to determine their trading strategy.

The fundamentalist studies the cause of market movement, while the technician studies the effect.

Many profitable trades are made moments prior to or shortly after major economic announcements.

Hope these will go a long way in helping you become a good trader in the forex market.

Visit the links below to open a forex trading account and start trading today:

1. www.agea.com/?gid=53541
2. www.instaforex.com/en/index.php?x=LGYM

Good luck!

4 BASIC FOREX TRADING PRINCIPLES FOR NEWBIES

1. In forex trading, cut your losses and let profits ride: 

The only way to make money from forex trading is by making enough money on your winning trades to cover your losses and to gain additional profit to grow your capital.

It is harder to put into practice than it sounds, as psychologically, it is much easier to "marry" your losing trades in the hope that the market will turn in your favour and grabbing your profit too soon when you see your hard earned gains slipping away as the market temporarily turns against you.

2. Trade according to a tried and tested system: 

The only way to cut out emotion in trading and adopts a more business-like and informed approach, is to use a system that have been developed and tested on market data.

In this way, all the trade decisions have already been made before you even enter the forex market.

This is a much less time consuming and less stressful way to trade for a living.

It is wise to open a demo account and to practice forex trading before risking your money.

If you are unsuccessful in a demo account, it is unlikely that you will suddenly become an expert trader in a live account, when using your own money adds to the pressure to succeed.

Above all, never risk more money than you can afford to lose.

3. Realise that forex market is unpredictable: 

The forex markets are influenced by billions of traders, economic and political events.

You simply cannot predict the direction and manner in which the markets will move.

Technical and fundamental analysis does much to provide a more educated guess than a simple coin toss but it is important to realise that each of these techniques will have a large failure rate.

You will lose a large percentage of the time. Some times you will lose on more trades than you gain on the trade.

4. Have a realistic expectation: 

Forex trading is an investment. It is important to have a realistic expectation of what you can achieve through forex trading.

The nature of forex trading is such that you may make a good return on your initial capital over an annual period. During that period you may have a number of consecutive losing months, with only a few bumper months in between.

Visit the links below to open a forex trading account today and start trading without further delay:

1. www.agea.com/?gid=53541 
2. www.instaforex.com/en/index.php?x=LGYM

Good luck in your forex trading venture.

5 REASONS WHY YOU SHOULD TRADE FOREX

Here are five(5) reasons why you should be a part of the largest market in the world:

1. 100:1 Leverage: 

Leverage enables you to hold a position worth up to 100 times more than your margin deposit.

For example, a USD 10.000 deposit can command positions of up to USD 1,000,000 through leverage.

2. Profit potential in falling or rising markets: 

Since the market is constantly moving, there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency.

When you trade currencies, they literally move against each other.

If the EUR/USD declines, for example, it is because the USD gets stronger against the EUR and vice versa.

So, if you think the EUR/USD will decline (that is, that the EUR will weaken versus the dollar), you would sell EUR now and then later you buy it(EUR) back at a lower price to make profit.

The opposite trading scenario would occur if the EUR/USD appreciates.

3. 24 HOUR TRADING OPPORTUNITY: 

In forex market, you have the opportunity to trade 24 hours a day, 5 days a week.

This gives you a unique opportunity to react instantly to breaking news that is affecting the market, to make profit from the market.

4. Commission free market: 

The fact that forex is often traded without commission makes it very attractive as an investment opportunity for investors like you.

Trading the "majors" is cheaper than trading other cross(currency pairs) because of the high level of liquidity associated with trading the major currencies.

5. High level of liquidity in forex market: 

The forex market is so liquid that there are always buyers and sellers to trade with.

The liquidity, especially that of the major currencies help ensure price stability and narrow spreads.

The liquidity comes mainly from banks.

Visit the following links to open your forex trading account and start today:
www.agea.com/?gid=53541 and
www.instaforex.com/en/index.php?x=LGYM

40 IMPORTANT FOREX TRADING TERMINOLOGIES

As a beginner, it is very necessary for you to know about some basic terminologies in forex trading business.

Here are 40 important terminologies for your consumption:

1. Spread:- This is the different between the price(Bid price) that you can sell a currency and the price(Ask price) that you can buy.

2. Pips:- A pip is the smallest unit by which a cross price quote changes. When trading the major currencies, you will often hear that there is a 3-pip spread.

On a contract or position, the value of a pip can easily be calculated. You know that the EUR/USD is quoted with four decimals, so all you have to do is cancel out the four zeros on the amount you trade and you will have value of the pip.

Thus, on a EUR/USD 100,000 contract, 1 pip is USD 10. On a USD/JPY 100,000 contract, 1 pip is equal to 1000 Yen, because USD/JPY is quoted with only two decimals.

3. Ask:- Is the price requested by the trader.

4. Bid:- Is the price offered by the trader. This ususlly indicates the highest price a purchaser will pay.

5. Base currency:- The currency that the investor buys or sells. In EUR/USD, EUR is the base currency.

6. Bear:- A bear market is one in which there has been a sustained fall in price and which does not look like it will recover quickly. Bear is someone who believes prices are heading down.

7. Bull:- Is someone who is optimistic about the market. A bull market is characterised by enthusiastic and sustained buying opportunities.

8. Bid/Ask:- The Bid is the rate you can sell while the Ask is the rate you can buy.

9. Cross:- In EUR/USD, the two currencies form the cross. When trading, the investor buys one currency with another.

10. Cross rate:- An exchange rate that is calculated from two other exchange rates.

11. EUR/USD:- This means that you trade EUR against USD. If you buy euro you pay in dollars and if you sell euro you receive dollars.

12. Interbank:- Short-term (often overnight) borrowing and lending between banks.

13. Long:- This means to buy.

14. Short:- Means to sell.

15. Leverage:- Leverage enables you to hold a position worth up to 100 times more than your margin deposit. For example, a USD 10,000 deposit can command positions of up to USD 1,000,000 through leverage.

16. Long position:- A position that increases its value as market prices increases.

17. Liquidity:- Is the ability of a market to accept large transactions.

18. Margin:- This is the deposit required when entering a position as well as to hold the open position.

19. NYSE:- Means, New York Stock Exchange.

20. Over the Counter:- When trading takes place directly between two parties rather than on an exchange.

21. Position:- Traders talk of "taking a position", which simply means buying or selling currency cross. "Position" can also refer to a trader's cash/securities/currencies balance.

22. Counter, secondary or variable currency:- In EUR/USD, USD is the counter currency.

23. Short position:- A position that benefits an investor when there is a decline in market prices.

24. Speculative:- Buying and selling in the hope of making a profit, rather than doing so for some fundamental business-related need.

25. Spot:- A spot rate is the current market price of an asset.

26. Asset Allocation:- Dividing instrument funds among markets to achieve diversification or maximum return.

27. Bearish:- This is a market view that anticipates lower prices.

28. Bullish:- Refers to a market view that anticipates higher prices.

29. Chartist:- Is an individual who studies graphs and charts of historic data to find trends and predict trend reversals.

30. Counterparty:- The other organization or party with whom trading is being transacted.

31. Day trader:- Speculator who takes position on instruments which are liquidated prior to the close of the same trading day.

32. Economic Indicator:- Is a statistics which indicates economic growth rates and trends. Such as retail sales and interest rate.

33. Exotic:- Is refer to a less broadly traded market instrument.

34. Fast market:- Rapid movement in a forex market caused by strong interest by buyers or sellers.

35. FED:- Refers to the USA, Federal Reserve.

36. GDP:- Total value of a Country's output, income or expenditure, produced within the Country's physical borders.

37. Resistant level:- A price level which is likely to result in a rebound but if broken, may result in a significant price movement.

38. Support level:- Is a price level where analyst suggests that price will rebound after a depreciation in market price.

39. Thin market:- Is a market in which trading volume, and liquidity is low and consequently, spread is wide.

40. Volatility:- A measure of the amount by which an asset price is expected to fluctuate over a given period.

Visit the links below to open your forex trading account today:
www.agea.com/?gid=53541  and
www.instaforex.com/en/index.php?x=LGYM

HOW YOU CAN TRADE(BUY AND SELL) AT THE FOREX MARKET

1. Trading Rising Prices: 

You believe that the euro will strengthen against the dollar, and decided to buy euro now in EUR/USD to sell it back later at a higher price.

If EUR/USD is quoted at Bid price of 0,9875 and Ask price of 0.9878, which means that you can sell 1 euro for 0.9875 USD or buy 1 euro for 0.9878 USD.

In this example, you buy euro 100,000, at the quote price of 0.9878(Ask price) per euro. Later, the market turns in favour of the euro and the EUR/USD is now quoted at Bid price of 0.9894 and Ask price of 0.9896.

Now you sell your euro at Bid price of 0.9894. The profit is calculated as follows:

Sell price - buy price × size of the trade. That is,

0.9894 - 0.9878 × 100,000 = USD 140 (profit).

(Note that the profit or loss is always expressed in the secondary currency).

2. Trading Falling Prices: 

If on the other hand, you believe that the euro will weaken against the dollar, and decided to sell euro in EUR/USD to buy it back later at a lower price.

If EUR/USD is quoted at a Bid price of 0.9875 and Ask price of 0.9880 and you decided to sell euro 100,000 at a Bid price of 0.9875.

Later, the euro weakens against the dollar and the EUR/USD is now quoted at Bid price of 0.9744 and Ask price of 0.9749.

You sell EUR at Bid price of 0.9875 and later buy it back at an Ask price of 0.9749. Your profit is then:

Sell price - buy price × size of your trade. That is,

0.9875 - 0.9749 × 100,000 = USD 1260 (profit).

Hope these brief explanation was helpful.

Visit the below links to open your forex account and start trading immediately: www.agea.com/gid=53541 or  www.instaforex.com/en/index.php?x=LGYM

Good luck!