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The foreign exchange market is also known as the FX market, and theforex market. Trading that takes place between two counties with

different currencies is the basis for the fx market and the background of

the trading in this market. The forex market is over thirty years old,

established in the early 1970's. The forex market is one that is not based

on any one business or investing in any one business, but the trading

and selling of currencies.

The difference between the stock market and the forex market is the

vast trading that occurs on the forex market. There is millions and

millions that are traded daily on the forex market, almost two trillion

dollars is traded daily. The amount is much higher than the money

traded on the daily stock market of any country. The forex market is one

that involves governments, banks, financial institutions and those similar

types of institutions from other countries. The

What is traded, bought and sold on the forex market is something that

can easily be liquidated, meaning it can be turned back to cash fast, or

often times it is actually going to be cash. From one currency to

another, the availability of cash in the forex market is something that

can happen fast for any investor from any country.

The difference between the stock market and the forex market is that

the forex market is global, worldwide. The stock market is something

that takes place only within a country. The stock market is based on

businesses and products that are within a country, and the forex market

takes that a step further to include any country.


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The stock market has set business hours. Generally, this is going to

follow the business day, and will be closed on banking holidays and

weekends. The forex market is one that is open generally twenty four

hours a day because the vast number of countries that are involved in

forex trading, buying and selling are located in so many different times

zones. As one market is opening, another countries market is closing.

This is the continual method of how the forex market trading occurs.

The stock market in any country is going to be based on only that

countries currency, say for example the Japanese yen, and the Japanese

stock market, or the United States stock market and the dollar.However, in the forex market, you are involved with many types of

countries, and many currencies. You will find references to a variety of

currencies, and this is a big difference between the stock market and

the forex market.

Forex trading uses currency and stock markets from a variety of

countries to create a trading market where millions and millions are

traded and exchanged daily. This market is similar to the stock market,

as people buy and sell, but the market and the over all results are much

much larger. Those involved in the forex trading markets include the

Deutsche bank, UBS, Citigroup, and others such as HSBC, Braclays,

Merrill Lynch, JP Morgan Chase, and still others such as Goldman Sachs,

ABN Amro, Morgan Stanley, and so on.

To get involved in the forex trading markets, contacting any of these

large broker assistance firms is going to be in your best interest. Sure,

anyone can get involved in the forex market, but it does take time to

learn about what is hot, what is not, and just where you should place

your money at this time.


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International banks are the markets biggest users on the forex markets,

as they have millions of dollars to invest daily, to earn interest and this

is just one method of how banks make money on the money you save in

their bank. Think about the bank that you deal with all the time. Do you

know if you can go there, and obtain money from 'another' country if

you are heading out on vacation? If not, that bank is most likely not

involved in forex trading. If you have to know if your bank is involved in

forex trading, you can ask any manager or you can look at the financial

information sheets that banks are to report to the public on a quarterly

baiss.

If you are new to the forex market, it is important to realize there is no

one person or one bank that controls all the trades that occur in the

forex markets. Various currencies are traded, and will originate from

anywhere in the world. The currencies that are most often traded in the

forex markets include those of the US dollar, the Eurozone euro, the

Japanese yen, the British pound sterling and the Swiss franc as well as

the Australian dollar. These are just a few of the currencies that are

traded on the forex markets, with many other counties currencies to be

included as well. The main trading centers for the forex trading markets

are located in Tokyo, New York and in London but with other smaller

trading centers located thought out the world as well.


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If you are interested in trading Forex, there are plenty of places that youcan go for great information. Forex for beginners is usually very easy to

learn and can be a great way to invest. If you are beginner and looking

to trade Forex, here are some tips.

There are tons of great places to learn Forex for beginners. Most Forex

brokers have their own tutorials or even an ecourse dedicated to teach

Forex to beginners. If you are just starting to look at Forex as a trading

option, take a look at the following resources for Forex beginners.

Forex stands for foreign exchange. Forex trades currency throughout

the world 24 hours a day. Forex is a great way to trade from home

because there is no central office and there are plenty of brokers

offering their member traders great software that can run and trade offof their home computer.

It is easy to invest in Forex if you are a beginner. You can open an

account with a small amount of funds. Many Forex brokers allow

beginners to trade with an account of only $250. For many Forex

traders, you dont even have to trade real money to check out a brokers

system or to see if you like investing with Forex. Many brokers allowyou to join their simulation trading platform, where you can trade in real

time, except without real money. This way you can get the hang of it,

before you invest a dime. If you are looking for a new investment

vehicle take a look at trading Forex for beginners.


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You can trade Forex from home with relative ease. Trading Forex from

home is one of the most popular ways day traders and small investors

are able to reach their investment goals from the privacy and comfort of

their own home. If you are interested in trading Forex from home, here

are some tips.

Trading Forex from home is incredibly simple. There are plenty of

brokers that enable you to trade in real time with great features.

Finding a Forex broker is relatively simple, however you should put lots

of thought into which features you would like, the information they

provide their members and the ease of use of their trading software.

Trading Forex from home is relatively easy once you have your

computer set up and a broker picked out. Before you start to trade

Forex with actual money, it is important to know all the ins and outs of

trading Forex as well as how to conduct research and use your brokers

Forex trading software. Many brokers allow you to try simulation

trading. A simulation trading environment is where you can trade in real

time foreign currencies with the actual software and features. The only

difference between simulation and real trading is that with simulation

software you dont have trade real money. This can be an excellent tool

to learn how to trade Forex from home.

Finding information from home regarding Forex is also very easy withthe help of Forex forums, broker trading resources and Forex charts.

Many investors use the Forex forums to find out about new tools, spot

trends in the market and hear commentary on new products or

forecasts. You can also find loads of information at your brokers site.

Most brokers usually offer great charts to track currencies and plenty of

articles that can fill you in on information that can help you trade. So

follow the above suggestions to trade Forex from home.


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Technical Analysis is the study of price movement. You can use pricecharts to track the history of price movement and attempt to anticipate

which way prices will go in the future.

Online forex brokers provide you with many different tools that are used

in technical analysis. Some of the most common are listed below.

Bollinger Bands

Bollinger Bands are used to measure market volatility.

They consist of three lines:

1. A simple moving average in the middle.

2. An upper band which indicates the simple moving

average plus 2 standard deviations.

2. A lower band which indicates the simple moving

average minus 2 standard deviations.

When market volatility is high, the bands spread apart.

When volatility is low, they come together.


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The Bollinger Bounce. Most of the time, the middle band

stay in between the outer bands. Think of the outer bands

as the border patrol. When the middle brand approaches one

of the border guards, it gets bounced away and back towards

the middle. Hence the name Bollinger Bounce. This is useful

to know because if you see the middle band approaching an

outer band, there's a good chance it will bounce off.

This strategy works best when prices are fluctuating and there

are no clear trends.

A good way to spot a trend early is the Bollinger Squeeze.

When the bands squeeze close together, it often means that a

breakout is about to occur. If the middle band breaks through

either the top or lower band, the trend will usually continue

to go in that direction.

Parabolic SAR (Stop And Reversal)

The Parabolic SAR indicator is used to spot trend reversals.

It is perhaps the easiest indicator to read, Dots are placed on

the chart in positions either above or below the candles (the

formula that calculates where the dots go is too complicated

to get into).


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Dots above the candles are a signal to sell.

Dots below the candles are a signal to buy.

Parabolic SAR works best when there are clear upward or downward

trends. It does not work well when price movement is small.

Stochastics

Stochastics is an indicator that is used to measure overbought and

oversold conditions in the market. It consists of a scale from 0-100.

As the stochastics lines are above 80 it means that the market is

overbought and a downward trend could be forming. When the lines fall

below 20 it means the market is oversold and an upward trend may be

forming.

Stochastics are useful in determining when to lock in profits and when

to issue buy or sell orders. But you should never rely on only one

indicator. Combine several and adjust them to your trading strategy.


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Candle Sticks

What do Japanese candlesticks have to do with trading forex? A whole

lot.

Originally created in Japan (as the name implies) several centuries ago

to trade rice, candle charts are used by thousands of traders to track

price movement.

Most people find candle charts much easier to read than standard bar

charts, and they have become incredibly popular. Most forex charts you

see are japanese candlesticks.

Candle charts are formed using the opening and closing prices, as well

as the high and the low.

If the price closes higher than it opened, a hollow candle

is drawn (usually drawn in white or green in color).

If the price closes lower than it opened, a filled candle

is drawn (usually drawn in black or red in color).

Most online brokers I've seen use the green/red color scheme rather

than the more traditional white/black. Trends are easily spotted even by

newcomers as green candles signify price increases while red indicates

price decreases.


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Fundamental Analysis

Any smart trader knows that in order to be successful they must be able

to analyze the market and predict price movement. This is true whether

you trade in stocks, bonds, commodities, currency, or any other for of

security.

Analysis can be done in two different ways: fundamental analysis

and technical analysis.

Technical analysis is the study of prices. The goal is to analyze the

history of price movement in an effort to predict future prices.

Fundamental analysis is the study of a nation's overall economic health.

I like to think of this as "Big Picture" analysis. The idea is that thestrength of a nation's economy will affect the supply and demand for its

currency, which will in turn affect the price of the currency.

For example, let's assume that the US economy is in a major upswing.

Since the economy is strong, the value of the dollar will be expected

to rise and currency traders will invest heavily in the dollar. This

bullish behavior becomes a self-fulfilling prophecy and the dollar

rises in value.


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That's a pretty simple concept, but judging the health of a nation's

economy is no easy task. There are many factors to consider, and two

traders may look at the same figures and interpret the data differently.

Fundamental analysts look at various economic indicators for signs of

an economies strength. Some of the indicators they analyze are the

interest rate, unemployment rate, consumer price index, and gross

domestic product (GDP).

These reports are released regularly by various government agencies

and non-government entities. You should find the latest schedule of

upcoming releases and put them on your calendar. Keep an eye on

them for a few months and see what effect they have on currency

prices.

One thing to keep in mind: it is not always the numbers contained in a

report that have the greatest impact, but rather the relation of the

numbers compared to what was forecasted.

In other words, a rise in interest rates may not have a significant

impact if forecasters were expecting it. But if they were expecting

interest rates to remain steady and there was an unexpected increase,

there may be a large impact on currency prices.


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A major disadvantage of fundamental analysis is that it can be a little

too "big picture". It is great for predicting overall economic growth

and price changes, but it doesn't offer enough details to target specific

entry and exit points. This is where technical analysis comes in.

Reading Forex Quotes

To a newcomer in the world of trading, forex quotes can be confusing.

But they are actually quite simple to read.

Let's look at an example of what a foreign exchange rate quote looks

like:

EUR/USD = 1.2526

Seems simple enough, right? This example shows the foreign exchange

rate between the Euro and the US Dollar.

It helps to remember that in any forex quote, there will always be two

currencies quoted. This is because when you make a trade on the

foreign exchange you are in effect buying one currency and selling a

second currency at the same time.

When reading forex quotes, the first currency listed is called the base

currency. The second currency listed is called the quote currency. Forex

quotes show us the price relationship between two currencies.


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The exchange rate tells you how many units of the quote currency you

have to pay in order to get one unit of the base currency.

In the example above, the base currency is the Euro and the quote

currency is the US dollar. The price quote tells us how each currency is

trading relative to the other. In order to buy one unit of Euros you will

have to sell 1.2526 units of US Dollars.

Still with me? Ok, just one more thing to add to our example: the

Bid/Ask spread.

There are no commissions charged on any trades placed in the forex

market. But brokers do get paid for their work through the bid/ask

spread.

Let's add the spread to our example and I'll explain:

EUR/USD = 1.2526/1.2528

Or, this can be simplified to:

EUR/USD = 1.2526/8

Brokers make their money by selling currencies at a slightly higher rate

than they buy them. This is perfectly legal and all brokers do it, though

the amount of the spread can vary.


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As a trader, you will buy the at bid price, which is the first price quoted.

You will sell at the ask price, which is the second price. The difference

between the prices is called the spread, which is retained by the broker

as their profit on the trade.

In our example, you would buy at 1.2526 and sell at

1.2528. The 0.0002 (2 pips) would go to the broker as

payment for executing the trade.

The bid/ask spread is a simple and straightforward way to calculate

trading fees and expenses.

Understanding Pips

To forex traders, everything revolves around pips.

"I'm up 35 pips for the day."

"I made a 127 pip profit on my last trade."

That's great, but what's a pip?

Pip is short for "percentage in point" and you may sometimes hear

people refer to pips as points.


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Put simply, a pip is the smallest unit of price for a currency. It's the last

decimal point in every exchange rate or currency pair.

For most currencies its 0.0001. So if you bought USD/CHF 1.2475 and

sold at 1.2489 you made 14 pips.

One common exception is USD/JPY. In this currency pair there are only

two decimal places so a pip is equal to 0.01.

The reason pips are so important is because they are the basis for

calculating profit or loss.

Pip Value.

With all these different currency pairs to deal with and with prices

fluctuating all the time, how do you know the value of a pip?

It's a simple calculation. For currency pairs in

which USD is the base currency, just divide a pip

(usually 0.0001) by the exchange rate.

For currency pairs in which USD is the quote currency,

its even simpler. The pip value is always one pip

(for example, 0.0001).


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So in our example above, when the exchange rate for

USD.CHF is 1.2489:

0.0001 / 1.2489 = 0.0000800704

That's a pretty tiny number. But remember that in forex trading you are

able to leverage small sums of money to move large quantities of

currency.

In other words, you can use leverage to make big profits off of that tiny

number.

Let's say your broker allows you to trade with leverage of 100:1. This

means that in order to buy a standard lot of $100,000, you only need

to put up $1,000.

You can see how trading in larger lots affects the pip value, and

therefore your profit or loss:

If you are only trading $1,000 in currency, the pip value is calculated asfollows:

0.0000800704 X 1000 = $0.08 per pip.

The price would have to go up by a whole lot of pips in order to make a

significant profit at that rate.


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That 14 pip profit only made you $1.12.

But by using leverage to buy a lot size of $100,000 your profit increases.

0.0000800704 X 100,000 = $8.01 per pip.

That's a profit of $112.14. Now you're talking.


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Forex risks are always present when you trade Forex. Just like any

other investment vehicle, Forex trading does have its risks. Here are

some tips and information on the risks inherent in Forex trading as well

as how to minimize some Forex risks.

Forex stands for foreign exchange and Forex is the largest financial

market in the world today with almost 2 trillion dollars worth of dailytrades. Forex is a trading platform that many people can access from

the privacy of their own home. There is no central market for Forex and

you can enjoy 24 hour trading around the world each day.

There are many people that sign up to trade Forex that dont

understand or take the time to learn how and why to trade Forex.

There are many risks involved in trading any kind of asset, whether it isstocks, bonds or currencies. If you are interested in trading, make sure

you understand Forex risks.

One of the biggest Forex risks is a leveraged buy. Some Forex

brokerages allow you to hold a certain amount of money in your account

but leverage that amount to up to 200 times its worth. While this can

be good if you are on the winning side of a trade, this can be

devastating if you lose your entire accounts worth plus many times

more.

Many Forex brokers have special features that can limit your risks such

as stop loss and limit orders and no negative balances. If you are

interested in trading Forex, before you start to trade, learn andunderstand the Forex risks involved.


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Here are some tips that will help you to minimize the risk in your trading

business ..

The first Forex trading tip is to always to remember that Forex trading

like any investment is not a sure thing. Just like any type of investment

or investment vehicle there are risks involved. No matter how much you

research your data or how much thought you put into your trading, you

can always lose money.

Another important Forex trading tip is that if you are just starting out,learn as much as possible about foreign exchange trading. There are

many theories, strategies and tools to help you trade Forex. Learn

which tools are available and how to use them effectively. You shouldnt

decide to just throw money around into an investment and go with the

flow. Forex trading is not a casino game and you can lose thousands of

dollars of your investment.

One of the most important Forex trading tips is to choose your trading

broker carefully. Dont just enroll with a trading broker because they

offer you great incentives or have a great web site. Shop around; find a

Forex trading broker that can help you reach your investment goals.

There are plenty of Forex trading brokers and many of them might not

have the resources to help you with your individual investment needs.

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