Your Guide to Learning a Forex Trading System

There are a great number of people in America that are interested in investing in order to make a tidy profit. There are many ways to invest and many ways to make profits by investing. One method that has been gaining in popularity is that of the Forex trading system. If you are unsure of what this is, let me explain. Forex stands for foreign exchange. A Forex trading system is defined as the simultaneous exchange of one countries currency for another countries currency. If you would like more information, please let this be your guide to learning a Forex trading system.
The Forex trading system involves trading some of the world's most major currencies. These are: the dollar, yen, British pound, Swiss franc, and the Euro. The way the exchange rates of these types of currencies change is based on economic growth. An example: Sometimes the Dollar is worth more than the British pound because the United States was in a period of economic growth while Britain was on the decline. This can be because the unemployment rate was declining in the United States, while on the rise in Britain. Another example: the export rate is up in Asia so the yen is worth more than the Swiss franc where the export rate is down. Economic growth changes daily, so the value of these currencies changes daily. You need to learn to watch for these changes in order to make any money with the Forex trading system.
The Forex Trading system is much larger than that of all U.S. stock markets combined. In fact, the Forex Trading system makes about 1.9 trillion dollars each year. This is 30 times larger than the U.S. stock markets. Also, Forex trading is done throughout the entire world, so it is available 24 hours a day, unlike the U.S. stock markets.
You can learn the Forex trading system for free online at various websites. Many websites offer a free demo account and free Forex trading System training. This way you can practice everything you learn for free, without investing or losing any real money. Then when you get a feel for the Forex trading system, many websites offer a free 30 day trial or free trades to new investors. It is best to utilize some of this free training and the free demo accounts before you start investing your own money.
Now that you understand the Forex trading system a little better, you may wish to get out there and start investing. There is a lot of money to be made, or lost. Be careful and make sure you get the proper training first. With the right frame of mind, you may be able to make some healthy sums of cash through the Forex trading system!

Forex Enterprise - A Full Review

A new marketing course to hit the internet by Nick Marks that advertises earnings of $1000 a day and $30,000 a month respectively. This turnkey system generating multiple streams of income is relatively new and so it is my pleasure to review it for you.
After purchasing you are given a login page where you are introduced to the system which is in website format. Everything is easy to access and well organized.
After Nick gives you a little pep talk about positive thinking and goal setting, you will be introduced to his first recommendation: join Coastal Vacations. While not a part of his main Forex system this is a recommendation I could've done without.
In the pay per click section you are given a large list of keywords that Nick found convert really well with his system. Some of the keywords in the list have bid prices already attached to them so you can get front page exposure.
The course also has $50 in free adwords credit that unfortunately only works with new accounts so I was out of luck. If you don't already have an account this is worth the price of the course alone.
The forex course shows you some inexpensive traffic methods and provides links to these sources. He also covers stuff like pop-over ads, e-mail lists and autoresponders. Not bad information by any means, and is an alternative to pay per click advertising if you have a smaller budget.
He has an ebook package that seemed like it was going to be really cool as there were dozens of bonus ebooks and software programs covering everything from creating ebooks and website templates, to getting top positions in the major search engines.
As I took a closer look at this package I realized there were some bargain bin informational products included. However, there were also alot of goodies in there as well that I found rather useful. You get so many ebooks and software in here that it really is worth far more than the price of the course.
There is a section on becoming an Ebay power seller in 90 days that goes into a fair amount of detail and wasn't bad. However, Ebay isn't something I have ever been particularly interested in doing. There is also a section on baccarat strategies that I had no interest in.
One of the last sections of his course introduces you to e-currency exchanging using the DXINONE system. It is a great way to acquaint yourself with this increasingly popular opportunity without having to buy standalone e-currency courses which can cost a couple hundred dollars.
The author has combined several effective ways to earn money online and rolled them all into one course. While I didn't jump up and down about all of his strategies, the free ebooks, software, and adwords credit make Forex Enterprise worth the money.

Forex Avenue: The Road to Riches

In my continuing quest to provide visitors of my site with a large amount of options to chose from when considering working from home I have done some research on Forex trading. I first learned of Forex trading while pursuing my MBA program. For those of you who have never heard of this, Forex trading is the exchange of foreign currency.
I know I would have never even know this was an option for making money had I not found out in class. Most of the really big corporations have departments of people that do this for a living because it can be very lucrative if done correctly. The best news I have learned about this process of exchanging currencies is that many of the websites that you can sign up with to do this offer free trial accounts to help you learn before you invest your money into trying it. You won't make any money in the trial accounts if you do well, it is just pretend money essentially but with the real market conditions. If you do well in the trial account you will know if this is something you want to try on your own.
Benefits to Forex trading are that is can be done 24/7 whereas the stock market is a business hours only exchange. It is 24/7 because it is done with countries around the world so clearly there are countries that are awake and working while we sleep. Another benefit is you are in control of the trading on your account. You do not need to hire a licensed broker to make your trades and charge you fees. Along those same lines, anyone who does any investing most likely knows that some funds require you to own then for a certain period of time or pay early withdrawal fees. You do not need to concern yourself with this either. One last benefit that I would like to point out is the fact that Forex is not really subject to the same kinds of swings in the market that stocks are subject to. Of course if you always buy and sell the same currencies then there will be market swings. But, because there are hundreds of currencies out there, there is always going to be something for you to make money on because while one currency is up in value another one is down and vice versa.
There are many resources available to someone interested in becoming involved in this type of training. The Federal Reserve Bank's website is just one example of the information available, http://www.ny.frb.org/markets/foreignex.html. Here is another article that you will find helpful in starting out in this field. http://www.forex.com/pdf/pro2.pdf . I have also included one of the sites that does offer a free lesson. http://www.shareasale.com/r.cfm?b=44910&u=155496&m=8912 .
While there are many benefits to this type of training, as I mentioned above, there are certainly risks involved as well. There are risks with exchange rates, central banks in foreign countries, and risks involving interest rates and credit. Forex is quickly becoming a popular way to help diversify your investment portfolio. If you are good with understanding investing concepts and enjoy doing it this may be the home business opportunity for you. Just do your research and try to find one of the sites offering the free trial account to practice with and you are well on your way down the Road to Riches.

A Guide For The Forex Currency Trading Beginner

For the Forex currency trading beginner a trade can be a little confusing until you break it down and come to grips with some of the trading terminology.
The purpose of any Forex trade is to swap one currency for another in the belief that the market will move and prices change such that the currency that you buy rises in value in relation to the currency which you sell.
The first important point is that each trade involves two currencies - the currency which you buy and the currency you sell. This gives us our first two important trading terms - the long position and the short position.
You take a long position when you buy a currency in the belief that it will rise in value and that you will able to sell at a profit.
If you sell a currency in the belief that it will fall in value you take a short position and hope to make a profit by buying it back again once the price has fallen.
The next important concept is that of the open and closed position. When you take a long position and buy a currency in the expectation that it will rise in value you open a position. When you later sell that currency to take you profit you close the position. The same is true when you take a short position and open that position by selling a currency in the expectation that it will fall in price and later close the position when you buy the currency back at the lower price.
In Forex trading currencies are referred to by codes (developed by the International Organization for Standardization and known as ISO codes) such as USD for the US Dollar and GBP for the UK Pound. Prices for these currencies are quoted as either USD/GBP or GBP/USD with the first currency appearing in the quote being the base currency and the second currency being the counter or quote currency.
Here's an example quote to make things a bit easier to understand:
USD/GBP = 0.5260
In this case the US Dollar is the base currency and the UK Pound is the counter or quote currency. The base currency is always read as a single unit and so this quote means that it will cost 0.5260 UK Pounds to buy 1 US Dollar. Here's another quote:
GBP/USD = 1.9150
In this case it will cost 1.9150 US Dollars to buy 1 UK Pound.
In real world trading it's a bit more complicated as the market maker needs to add in his profit for selling you a currency or for buying currency from you. In reality therefore a quote might look more like this:
GBP/USD = 1.9238 1.9243
In this case the first figure is the 'sell' or 'ask' figure and the second is the 'buy' or 'bid' figure. The first figure is price at which a trader will sell the currency pair and the second is the price at which he will buy the pair. The difference between the two prices is known as the spread.
Prices are normally quoted to four decimal places and the fourth decimal place, which represents the smallest amount by which one currency can move against the other, is known as a 'pip'. In this case therefore the spread is 5 pips.
In our example therefore, if you wish to sell UK Pounds, the market maker will buy them from you at 1.9243 US Dollars per UK Pound and, if you wish to buy UK Pounds, 1 UK Pound will cost you 1.9238 US Dollars.
If you are just starting to learn Forex currency trading then this probably seems a little bit complicated but it represents the basis on which the Forex market operates and will quickly become second nature.

Calculating Interest On Forex Trades

One of the great things about Forex trading is your ability to trade using leverage, effectively borrowing sometimes as much as 1,000 times your capital to make a trade. But borrowing money for currency trading is exactly the same as borrowing money for any other purpose and you will have to pay interest on your loan.
Currency transactions involve both buying and selling currencies however and this means that interest payments due on money which you borrow to fund a sale can be offset by interest earned on the currency you buy. If this seems a bit confusing we will take a look at an example in a minute but, first, let's take a moment to look at the subject of interest rates in general to see the wider picture as it affects the foreign exchange market.
Central banks set interest rates to meet a country's monetary policy and interest rates raise or lower the cost of a currency. High interest rates will make it expensive to buy a currency and low interest rates will make a currency more affordable.
As an example of how interest rates are used imagine the government of a country with high inflation. With the price of goods and services rising rapidly, the government might decide to raise interest rates. This would increase the cost of the country's currency making borrowing more expensive and both demand and consumption fall. As demand begins to fall, so the rate at which prices rise will also begin to fall and inflation will come down.
In a similar fashion, a country experiencing recession might decide to lower interest rates in an effort to stimulate the economy into growth. As the cost of the currency falls, so too will the cost of borrowing and investors, companies and individuals will be enticed to borrow and thus spend more, increasing demand and stimulating supply to meet that increased demand.
The interest rates which are set by central banks also determine the rate at which the commercial banks can borrow from the government and the rate at which they lend to their customers, which of course includes foreign currency traders.
So how do interest rates impact Forex trades?
Imagine a trader who buys GBP/USD. In this case he needs to borrow US Dollars to buy UK Pounds and will both pay interest on the US Dollars he borrows and earn interest on the UK Pounds he buys.
As long as the Bank of England interest rate is higher for the UK Pound than the interest rate set for the US Dollar by the Federal Reserve, the trader has the opportunity to earn more in interest on his holding of UK Pounds that he is paying on the US Dollars he had borrowed.
In general however, unless the difference between the two interest rates is significant, any net gain or loss will usually be quite small. It also has to be remembered that interest rates are set at an annual rate and that most trading position are held open for only a short, or very short, period of time. This acts to lower any interest gained or paid significantly.

Forex Trading Bollinger Bands Guide

Forex trading Bollinger bands are one of the most commonly used indicators for technical analysis. They are used in order to determine Forex trading oversold and overbought prices. When the price touches the upper Bollinger band it indicates traders to sell their currency, and when it reaches the lower band traders know to place an ask order to buy the currency.
Bollinger bands can be very useful as a Forex trading strategy, especially when you want to know the right timing for entry and exit of a certain currency. The price will switch direction usually when it touches one of the Bollinger bands, and this is why traders often use this to buy and sell the currency. Sometimes the price of currency goes past the Bollinger band, and this is also important because it tells traders that the currency will continue in the same direction as before, and create new wider Forex trading Bollinger bands.

What’s With Forex Margins?

Buying on margin is almost a necessity in the Forex (Foreign Exchange market) because the standard transaction is $100,000 and known as a “lot”. Lots have to be that big on the Forex because of the sheer volume of money changing hands—nearly $1.8 trillion dollars every day (and the market is open 24 hours per day, Sunday through Friday). This huge volume is a large draw for investors along with other advantages, such as:• Large volatility means great opportunity for profit• Large volume means market is liquid and easy to enter/exit a position• Ability to profit whether the market is rising or falling• Stops and other account instruments can limit risk while ensuring maximum profitability• Opportunity for commission free tradesIt’s simple: The greater the risk, or volatility, the greater the potential for profit. In truth, retail or smaller Forex investors could not even play on the Forex market until rather recently. Prior to that, only investment banks, hedge funds, and really big investors could even trade on the Forex. Without leveraging accounts (or trading “on margin”), there is no way that the average investor could afford to trade.Now although the average Forex transaction is called a lot and $100,000, there are brokers that permit investors to trade “mini-lots” for $10,000 and some even offer “micro-lots”. However, the typical transaction is a lot and the typical investor would need to put up $1,000 in order to acquire a position, or 1%. Brokers and trading institutions need to have some kind of collateral in case of loss. For retail Forex traders, that collateral is the 1% margin put up to acquire the position. The broker will credit the trading account with this margin and secure it in the event of any future trading losses. Because of the large minimum trading amounts, leveraged trading is simply a practical necessity for the retail Forex trader. However, because investment banks and other similar institutions must guarantee the loans used to leverage your trade—there is naturally an interest charge to factor into the transaction. While margins do allow smaller investors to realize the huge profits available in the Forex, they tend to enhance the rates of loss while adding a systemic cost to the process.Leveraged financing, however, is the backbone of the new Forex and definitely has helped to fuel its trade volume. It is not common for losses to create a negative account because most brokers will close out an account once the margin has been used. However, losses will mount quickly in such a volatile market which is why all investors are advised to place stops with their orders. If stops are not placed and the account is not set up to zero out when the margin has been used, it is possible to incur losses all the way up to the size of the transaction, or $100,000 in most cases. It definitely scares some investors to think about the potential for loss when leveraging a position. However, by simply setting stops in place, the potential for dramatic loss is contained while still allowing the investor the potential for unlimited profits. Forex margins are a reality for retail traders but there is nothing to worry about so long as you set your account up properly and put stops in place.

Free Online Forex Trading Courses - Some Basics

Are there any good free online forex trading courses on the Internet? It all depends who you talk to. Before you decide to believe everything that you read after you download free online forex trading courses there are a few issues that you should be aware.
First of all, the best things in life are not always free and the same can be said of these free online forex trading courses. Consider who is offering the free online forex trading course. Why are they giving the book away? Are they promoting a particular forex trading site or trying to get you to enroll it? How pushy is the material inside the book when it comes to getting you to invest on a certain website? The answers to these questions could all be factors regarding the integrity of the information you are being handed for free.
Another mark of better quality free online forex trading courses is a lack of replication of widely available information. You know you are reading a book that is probably not written by a good expert if most of the information in it can already be easily found by surfing on the Internet. You might be better off simply sticking with the advice and how-to articles offered on the company sites rather than being guided by a badly written e-course or e-book.
The best free online forex trading courses will not be limited to the discussion of how just one company trades. It will give you a comprehensive view of how all of the sites run by major corporations work when it comes to the process of futures trading.
Many sites that offer futures trading also offer free online forex trading courses. This is part of their incentive to get you to sign up with them. These courses are invaluable, especially if you have decided you will already sign up with a company as a futures trader.
Autor Tiffany Walker has cracked the code to investing in Forex online. Read her most recent articles here: Free Online Forex Trading Courses.

Five Reasons You Have to Start Forex Trading

Why should you consider foreign exchange, or forex trading?
One compelling reason is that it is a huge business, trading nearly two trillion U.S. dollars on a daily basis. The potential to make money is out there for the well-informed trader.
The forex market is the largest in the world. It is larger than the U.S. stock market, and has a daily trading volume larger than all the world's stock markets combined.
The following list provides a few reasons why forex trading is a smart move.
1. It's Easy
If you feel the idea of trading on the stock market is intimidating, you're not alone. There is no way that anyone, including professional brokers, can know enough about all the stock options. Therefore, many traders specialize or focus on particular areas of the stock market, and many individuals are left to rely on the opinions of the professionals, who may or may not be good at their craft.
Trading on the forex market, in contrast, is much simpler. The primary currencies traded are the U.S. dollar, the Japanese yen, and the British pound. There is less to keep track of, so conducting research and analysis can be much easier.
2. You Can Do it from Home
If you're interested in getting involved in forex trading, all you need is a computer and a bit of time.
Granted, conducting some research is wise if you want to make the best choices. But once you have an idea of your strategy, you can conduct transactions online for minimal fees and without having to pay a professional to do it for you (although this is an option).
There are a number of online options for trading foreign exchange, so you'll need to conduct some research to determine the best choice for you. If you know others who trade this way, ask for their preferences.
Conducting a simple Google search on forex trading will yield many results, so review and choose carefully.
3. The Investment is Minimal
To get involved in currency trading, you do not need to invest a lot of cash upfront. Many trading options are available for a small investment, some as low as a few hundred dollars. This allows new traders in particular to get involved, learn the process, and risk very little.
To trade in the forex market, you need to determine your risk limit, and not invest above that amount. Because the initial investment can be low, many people can get involved that may not be able to invest in other options, such as traditional stocks.
Forex trading is a good way to enter the trading market.
4. You Can Make Money
While trading on the forex market takes some research, skill, and a bit of luck, it is possible to make money. The potential for huge payoffs is at times exaggerated, but there are traders making large amounts of money in this market.
The key is to learn what you are doing and make smart choices. This can include determining how much you are able and willing to risk, taking risks when necessary, and learning as much as you can about the market.
Trading on the forex market also offers you more leverage than in other markets. You can use smaller amounts of money to your advantage, and the trading process is simpler than in other markets.
5. It's Flexible
Trading on the Foreign Exchange market is a 24-hour process, which means that you don't need to wait for the opening and closing of the exchange to know where you stand. You can make trades at any time of the day, which gives you much more control than if you are operating in the traditional stock market. This also allows traders to respond to breaking news immediately.
The advantages of real-time trading are advantageous in that traders have a much better understanding of their investments. Conversely, in the traditional stock market, after-hours activities, for example, can affect stock values, but the affects are not immediately available.
If you're interested in trading on the forex market, do your research. Many trading companies provide free information online. The more you know, the better you decisions you'll be able to make. Many of these same companies offer free trial periods as well, which you can use to get your feet wet and determine if currency trading is for you.

Forex Options Market Overview

The forex options market started as an over-the-counter (OTC) financial vehicle for large banks, financial institutions and large international corporations to hedge against foreign currency exposure. Like the forex spot market, the forex options market is considered an "interbank" market. However, with the plethora of real-time financial data and forex option trading software available to most investors through the internet, today's forex option market now includes an increasingly large number of individuals and corporations who are speculating and/or hedging foreign currency exposure via telephone or online forex trading platforms.Forex option trading has emerged as an alternative investment vehicle for many traders and investors. As an investment tool, forex option trading provides both large and small investors with greater flexibility when determining the appropriate forex trading and hedging strategies to implement.Most forex options trading is conducted via telephone as there are only a few forex brokers offering online forex option trading platforms.Forex Option Defined - A forex option is a financial currency contract giving the forex option buyer the right, but not the obligation, to purchase or sell a specific forex spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the forex option buyer pays to the forex option seller for the forex option contract rights is called the forex option "premium."The Forex Option Buyer - The buyer, or holder, of a foreign currency option has the choice to either sell the foreign currency option contract prior to expiration, or he or she can choose to hold the foreign currency options contract until expiration and exercise his or her right to take a position in the underlying spot foreign currency. The act of exercising the foreign currency option and taking the subsequent underlying position in the foreign currency spot market is known as "assignment" or being "assigned" a spot position.The only initial financial obligation of the foreign currency option buyer is to pay the premium to the seller up front when the foreign currency option is initially purchased. Once the premium is paid, the foreign currency option holder has no other financial obligation (no margin is required) until the foreign currency option is either offset or expires.On the expiration date, the call buyer can exercise his or her right to buy the underlying foreign currency spot position at the foreign currency option's strike price, and a put holder can exercise his or her right to sell the underlying foreign currency spot position at the foreign currency option's strike price. Most foreign currency options are not exercised by the buyer, but instead are offset in the market before expiration.Foreign currency options expires worthless if, at the time the foreign currency option expires, the strike price is "out-of-the-money." In simplest terms, a foreign currency option is "out-of-the-money" if the underlying foreign currency spot price is lower than a foreign currency call option's strike price, or the underlying foreign currency spot price is higher than a put option's strike price. Once a foreign currency option has expired worthless, the foreign currency option contract itself expires and neither the buyer nor the seller have any further obligation to the other party.The Forex Option Seller - The foreign currency option seller may also be called the "writer" or "grantor" of a foreign currency option contract. The seller of a foreign currency option is contractually obligated to take the opposite underlying foreign currency spot position if the buyer exercises his right. In return for the premium paid by the buyer, the seller assumes the risk of taking a possible adverse position at a later point in time in the foreign currency spot market.Initially, the foreign currency option seller collects the premium paid by the foreign currency option buyer (the buyer's funds will immediately be transferred into the seller's foreign currency trading account). The foreign currency option seller must have the funds in his or her account to cover the initial margin requirement. If the markets move in a favorable direction for the seller, the seller will not have to post any more funds for his foreign currency options other than the initial margin requirement. However, if the markets move in an unfavorable direction for the foreign currency options seller, the seller may have to post additional funds to his or her foreign currency trading account to keep the balance in the foreign currency trading account above the maintenance margin requirement.Just like the buyer, the foreign currency option seller has the choice to either offset (buy back) the foreign currency option contract in the options market prior to expiration, or the seller can choose to hold the foreign currency option contract until expiration. If the foreign currency options seller holds the contract until expiration, one of two scenarios will occur: (1) the seller will take the opposite underlying foreign currency spot position if the buyer exercises the option or (2) the seller will simply let the foreign currency option expire worthless (keeping the entire premium) if the strike price is out-of-the-money.Please note that "puts" and "calls" are separate foreign currency options contracts and are NOT the opposite side of the same transaction. For every put buyer there is a put seller, and for every call buyer there is a call seller. The foreign currency options buyer pays a premium to the foreign currency options seller in every option transaction.Forex Call Option - A foreign exchange call option gives the foreign exchange options buyer the right, but not the obligation, to purchase a specific foreign exchange spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the foreign exchange option buyer pays to the foreign exchange option seller for the foreign exchange option contract rights is called the option "premium."Please note that "puts" and "calls" are separate foreign exchange options contracts and are NOT the opposite side of the same transaction. For every foreign exchange put buyer there is a foreign exchange put seller, and for every foreign exchange call buyer there is a foreign exchange call seller. The foreign exchange options buyer pays a premium to the foreign exchange options seller in every option transaction.The Forex Put Option - A foreign exchange put option gives the foreign exchange options buyer the right, but not the obligation, to sell a specific foreign exchange spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the foreign exchange option buyer pays to the foreign exchange option seller for the foreign exchange option contract rights is called the option "premium."Please note that "puts" and "calls" are separate foreign exchange options contracts and are NOT the opposite side of the same transaction. For every foreign exchange put buyer there is a foreign exchange put seller, and for every foreign exchange call buyer there is a foreign exchange call seller. The foreign exchange options buyer pays a premium to the foreign exchange options seller in every option transaction.Plain Vanilla Forex Options - Plain vanilla options generally refer to standard put and call option contracts traded through an exchange (however, in the case of forex option trading, plain vanilla options would refer to the standard, generic forex option contracts that are traded through an over-the-counter (OTC) forex options dealer or clearinghouse). In simplest terms, vanilla forex options would be defined as the buying or selling of a standard forex call option contract or a forex put option contract.Exotic Forex Options - To understand what makes an exotic forex option "exotic," you must first understand what makes a forex option "non-vanilla." Plain vanilla forex options have a definitive expiration structure, payout structure and payout amount. Exotic forex option contracts may have a change in one or all of the above features of a vanilla forex option. It is important to note that exotic options, since they are often tailored to a specific's investor's needs by an exotic forex options broker, are generally not very liquid, if at all.Intrinsic & Extrinsic Value - The price of an FX option is calculated into two separate parts, the intrinsic value and the extrinsic (time) value.The intrinsic value of an FX option is defined as the difference between the strike price and the underlying FX spot contract rate (American Style Options) or the FX forward rate (European Style Options). The intrinsic value represents the actual value of the FX option if exercised. Please note that the intrinsic value must be zero (0) or above - if an FX option has no intrinsic value, then the FX option is simply referred to as having no (or zero) intrinsic value (the intrinsic value is never represented as a negative number). An FX option with no intrinsic value is considered "out-of-the-money," an FX option having intrinsic value is considered "in-the-money," and an FX option with a strike price at, or very close to, the underlying FX spot rate is considered "at-the-money."The extrinsic value of an FX option is commonly referred to as the "time" value and is defined as the value of an FX option beyond the intrinsic value. A number of factors contribute to the calculation of the extrinsic value including, but not limited to, the volatility of the two spot currencies involved, the time left until expiration, the riskless interest rate of both currencies, the spot price of both currencies and the strike price of the FX option. It is important to note that the extrinsic value of FX options erodes as its expiration nears. An FX option with 60 days left to expiration will be worth more than the same FX option that has only 30 days left to expiration. Because there is more time for the underlying FX spot price to possibly move in a favorable direction, FX options sellers demand (and FX options buyers are willing to pay) a larger premium for the extra amount of time.Volatility - Volatility is considered the most important factor when pricing forex options and it measures movements in the price of the underlying. High volatility increases the probability that the forex option could expire in-the-money and increases the risk to the forex option seller who, in turn, can demand a larger premium. An increase in volatility causes an increase in the price of both call and put options.Delta - The delta of a forex option is defined as the change in price of a forex option relative to a change in the underlying forex spot rate. A change in a forex option's delta can be influenced by a change in the underlying forex spot rate, a change in volatility, a change in the riskless interest rate of the underlying spot currencies or simply by the passage of time (nearing of the expiration date).The delta must always be calculated in a range of zero to one (0-1.0). Generally, the delta of a deep out-of-the-money forex option will be closer to zero, the delta of an at-the-money forex option will be near .5 (the probability of exercise is near 50%) and the delta of deep in-the-money forex options will be closer to 1.0. In simplest terms, the closer a forex option's strike price is relative to the underlying spot forex rate, the higher the delta because it is more sensitive to a change in the underlying rate.

Things You Should Know About Forex Trading

How difficult is it to make money trading the Forex market? How much time does it take to actually be able to make a living trading the Forex market? These and other important aspects of trading are to be discussed in this article.
Trading the Forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others. Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. Does this mean that it is easy to make money trading the Forex Market? Not at all.
Forex brokers agree that 90% of traders end up losing money, 5% of traders end up at break even and only 5% of them achieve consistent profitable results. With these statistics shown, I don't consider trading to be an easy task. But, is it harder to master any other endeavor? I don't think so, consider musicians, writers, or even other businesses, the success rates are about the same, there are a whole bunch of them who never got to the top.
Now that we know it is not easy to achieve consistent profitable results, a must question would be, Why is it that some traders succeed while others fail to trade successfully in the Forex market? There is no hard answer to this question, or a recipe to follow to achieve consistent profitable results. What we do know is that traders that reach the top think different. That's right, they don't follow the crowd, they are an independent part of the crowd.
A few things that separate the top traders from the rest are:
Education: They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.

Forex trading system: Top traders have a Forex trading system. They have the discipline to follow it rigorously, because they know that only the trades that are signaled by their system have a greater rate of success.
Price behavior: They have incorporated price behavior into their trading systems. They know price action has the last word.
Money management: Avoiding the risk of ruin is a primary subject to the best traders. After all, you cannot succeed without funds in your trading account.
Trading psychology: They are aware of every psychological issue that affects the decisions made by traders. They have accepted the fact that every individual trade has two probable outcomes, not just the winning side.
These are, among others, the most important factors that influence the success rate of Forex traders.
We know now that it is not easy to make money trading the Forex market, but it is possible. We also discussed the most important factors that influence the rate of success of Forex traders. But, how much time does it take to have consistent profitable results? It is different from trader to trader. For some, it could take a life time, and still don't get the desired results, for some others, a few years are enough to get consistent profitable results. The answer to this question may vary, but what I want to make clear here is that trading successfully is a process, it's not something you can do in a short period of time.
Trading successfully is no easy task; it is a process and could take years to achieve the desired results. There are a few things though every trader should take in consideration that could accelerate the process: having a trading system, using money management, education, being aware of psychological issues, discipline to follow your trading system and your trading plan, and others.

Incorporating Price Action into a Forex Trading System

Trading the Forex market has become very popular in the last few years. But how difficult is it to achieve success in the Forex trading arena? Or let me rephrase this question, how many traders achieve consistent profitable results trading the Forex market? Unfortunately very few, only 5% of traders achieve this goal. One of the main reasons of this is because Forex traders focus in the wrong information to make their trading decisions and totally forget about the most important factor: Price behavior.
Most Forex trading systems are made off technical indicators (a moving average (MA) crossover, overbought/oversold conditions in an oscillator, etc.) But what are technical indicators? They are just a series of data points plotted in a chart; these points are derived from a mathematical formula applied to the price of any given currency pair. In other words, it is a chart of price plotted in a different way that helps us see other aspects of price.
There is an important implication on this definition of technical indicators. The fact that the readings obtained from them are based on price action. Take for instance a long MA crossover signal, the price has gone up enough to make the short period MA crossover the long period MA generating a long signal. Most traders see it as “the MA crossover made the price go up,” but it happened the other way around, the MA crossover signal occurred because the price went up. Where I'm trying to get here is that at the end, price behavior dictates how an indicator will act, and this should be taken into consideration on any trading decision made.
Trading decisions based on technical indicators without taking price action into consideration will give us less accurate results. For example, again a long signal generated by a MA crossover as the market approaches an important resistance level. If the price suddenly starts to bounce back off that important level there is no point on taking this signal, price action is telling us the market doesn't want to go up. Most of the time, under this circumstances, the market will continue to fall down, disregarding the MA crossover.
Don't get us wrong here, technical indicators are a very important aspect of trading. They help us see certain conditions that are otherwise difficult to see by watching pure price action. But when it comes to pull the trigger, price action incorporation into our Forex trading system will definitely put the odds in our favor, it will generate higher probability trades.

So, how to create a perfect Forex trading system?
First of all, you need to make sure your trading system fits your trading personality; otherwise you will find it hard to follow it. Every trader has different needs and goals, thus there is no system that perfectly fits all traders. You need to make your own research on various trading styles and technical indicators until you find a concept that perfectly works for you. Make sure you know the nature of whatever technical indicator used.
Secondly, incorporate price action into your system. So you only take long signals if the price behavior tells you the market wants to go up, and short signals if the market gives you indication that it will go down.
Third, and most importantly, you need to have the discipline to follow your Forex trading system rigorously. Try it first on a demo account, then move on to a small account and finally when feeling comfortably and being consistent profitable apply your system in a regular account.

Deadly Forex Mistakes That Assure Failure

Before venturing into your trading journey there are some things you need to be aware of, otherwise you could succeed on your trading adventure, and we don't want that to happen, do we? This Forex training guide will help you track the most costly mistakes Forex traders do.
First of all, make sure you don't have a trading system. Having a trading system might increase the odds of your success. If you have a system, you will have an objective way to get in and out the market. When traders create their trading systems they think objectively since there is no position to be taken at the moment. If there is no position to be taken, there is also no money at risk, if there is no money at risk, we do think objectively and are open to every possibility, thus we are able to find low risk trading opportunities. So make sure you don't have a system and trade based on a randomly approach.
If you have already created your system, then don't follow it, be undisciplined. If you follow your system, there is a possibility that you can profit from the Forex market based on the trading opportunities you have found. If you want to fail on your trading, be sure to be undisciplined.
Don't get educated. Most successful traders are very well educated in the market they trade (stocks, Forex, futures, etc.) If you get educated, you might acquire the knowledge and experience you require to master the Forex market. Don't read about the Forex market, don't enroll into Forex training programs and don't even look at historical charts.
Don't use any money management technique. The purpose of money management is to avoid the risk of ruin, but at the same time it helps you boost your profits, allowing them to grow geometrically. For instance, by using no money management techniques, there is a possibility that in loosing 10 trades in a row you could empty your trading account. On the other hand, by applying simple money management techniques you can avoid it. So make sure, if you want to fail, don't even consider money management.
Forget about psychological issues. You need to get every trade to win. Successful traders know that they don't need to win every trade in order to profit from the market. This is one characteristic that is hard to understand and really apply. Why? Because we are taught, since kids, that any number below 70% is a bad number. In the Forex trading environment, this is not true.
Don't even consider using a Risk-reward (RR) ratio greater than 1-1. If you use a RR ratio of 1-2 (willing to make twice the amount risked in one trade) then you only need a system that is right around 50% to make money. If you use a RR ratio of 1-3 (willing to make three times the amount risked in one trade) then you will need a system that is right around 40% of the time to make money. So make sure to use a RR ratio below 1-1.
By applying every point outlined in this Forex training guide, you will almost assure your failure in your Forex trading journey. Do the opposite, and you will have the possibility to achieve what every trader is looking for: consistent profitable results.

FOREX Trading Strategy - The Secret of Timing

Once you،¯ve identified a trading opportunity, the next step is to decide EXACTLY when to buy - and this is where many traders go wrong.Here we explain how to incorporate better market timing into your FOREX strategy - so that you can make bigger profits.Most traders time their entry levels incorrectly, so here،¯s the right way to do it:Using Support and Resistance CorrectlyA basic wisdom of market timing is ،°buy low, sell high،± - well, the reality is, if you try this in FOREX trading, you،¯ll end up losing money. First, let،¯s define what support and resistance meansA support level is a historical price that traders come in, and buy to ،°support the market،± ¨C and the more times it،¯s tested, the more valid the support will be.Conversely, a resistance level is a level on the charts that ،°resisted prices from moving higher،±- again the more times it،¯s tested, the more significant it becomes.Why Buy Low and Sell High doesn،¯t Work،°Buy low, sell high،± is accepted wisdom by the majority of traders - but this logic is fundamentally flawed - use it in FOREX trading, and you،¯re asking for trouble. Why? - If you wait for a pullback, you،¯re going to miss some of the biggest moves.Think about it - what if a currency starts to trend and doesn،¯t pullback? (How often have you seen this?) If you،¯re waiting for a pullback that never comes, you،¯ll never get in on the trade ¨C and you،¯ll miss a major opportunity.You Need to Feel UncomfortableWhen Trading in the FOREX market, you should usually feel uncomfortable (and that،¯s why most traders don،¯t make these trades) - as no one likes to buy or sell after the market has started trending - but doing this will make you money.The fact is, the more comfortable you feel when entering a trade at support, the less likely the trade will be a big winner.During any given year, most of the big moves in currencies, take place from new MARKET HIGHS with NO pullback.If you base your FOREX Trading strategy around waiting for a warm comfy entry, at key support, you،¯re going to miss the biggest and most profitable trades ¨C so step away from the losing majority of traders.Your FOREX trading strategy should give you a different mindset - most traders ،°buy low and sell high،± - so you should ،°buy high and sell higher،± ¨C i.e. you should be doing the opposite of what the crowd are doing.Don،¯t worry - most traders lose money, and their FOREX Trading strategy is based on the flawed logic we have just discussed - so not doing what they do makes total sense. Therefore, look for breakouts through support and resistance - and sell and buy respectively.Its Tough Mentally - But it Makes Money!Sure, it،¯s hard to do - the majority don،¯t agree with you - and no one likes to go against the majority. However, it،¯s the right thing to do, to make your FOREX trading successful. Think about what we،¯ve just said, and you،¯ll see it makes logical sense.Has this Happened to You?How many times do traders buy into support, and the market breaks support, stops them out and continues to decline. On the other hand, another common scenario is, price never get to support - it simply goes higher - and the trader misses the chance to get in on the trend.This type of trading is tough mentally - that،¯s why 90% of traders don،¯t do it - they want to be comfortable - well being comfortable is great, but you،¯ll lose money.Breakouts work, and if you use them in your FOREX Trading strategy, you won،¯t be comfortable on entry - but you،¯ll make money - and that will more than compensate.The way to succeed in FOREX trading is to do what the losing majority don،¯t do - then you can join the elite 10% of traders who make the big profits - try it and see!

Learn Forex Trading - Which Forex Strategy Is Right For Me

Learning to trade Forex is not an easy task, but by no means is it difficult either. Learning to trade Forex does not require a great intellect or a college degree. Doctors have failed as traders and construction workers have become millionaires. Trading is all about discipline, determination and perseverance.The key is to understand who you are as a trader and trade to your strength. Leveraging your strength can be magnified by deploying the appropriate Forex trading strategy. There are hundreds, if not thousands of Forex trading strategies out there. Logic will tell us that there is a currency strategy out there which leverages our strengths. It is not a one-size-fits-all world. To immediately cut to the chase and take away the magic, it all comes down to two basic Forex strategies; trend-following and range-bound. All Forex trading strategies use a variety of indicators and combinations, MACD, Moving Averages, Stochastic, Chart Patterns, Candlesticks, Pivot Points, Fibonacci ratios, Elliott Wave analysis, Bollinger Bands and the list goes on and on. Let،¯s take away the magic again. These indicators and studies are merely measuring support and resistance and trend in the Forex market.But which strategy really works? This is the age old question?First, we must understand who we are as traders. Does our personality fit the pip sniper mode or does our disposition attract us more towards swing trading. Finding your trading personality will mean studying and experiencing the different time frames and associated Forex trading strategies. Over time you will notice a higher level of success and/or comfort trading one style over others. Pay attention! The market is telling you where your skill is more capable of extract consistent profits for the market. This is why journaling is so important to your Forex trading routine.Secondly, if you are using someone else،¯s strategy, a most of us are, deploy this strategy without change until you fully and completely understand all aspect of the strategy through back-testing and actual experience. As I was told; dance the dance you have been taught until you learn a dance of your own!Don،¯t fall into the trap of jumping from strategy to strategy or combining different strategies when the one you are using doesn،¯t yield immediate success. This is only a recipe for disaster. Take the time to really understand the trading strategy. Study the components individually so a deeper understanding of the strategic mechanisms is mastered.Above all, know when and when not to deploy this strategy. You will not find consistent success implementing a trend following system in a range-bound currency market.So what،¯s the right strategy for you? It is simple, the one that works. It doesn،¯t matter if it is complicated or simple, trend-following or range-bound, uses Fibonacci studies, pivot points or both. If you understand the components, internalize its use, and drive consistent profits into your trading account, then you have your Forex trading strategy.It doesn،¯t matter what the experts say, your account balance is the ultimate judge and jury for your Forex trading strategy.

Online Forex Trading Strategies

Forex trading strategies are the key to successful forex trading or online currency trading. A knowledge of these forex trading strategies can mean the difference between a profit and a loss and it is therefore imperative that you fully understand the strategies used in forex trading.Forex trading is very different from trading in stocks and using forex trading strategies will give you more advantages and help you realize even greater profits in the short term. There are a wide range of forex trading strategies available to investors and one of the most useful of these forex trading strategies is a strategy known as leverage.This forex trading strategy is designed to allow online currency traders to avail of more funds than are deposited and by using this forex trading strategy you can maximize the forex trading benefits. Using this strategy you can actually utilize as much as 100 times the amount in your deposit account against any forex trade which will make backing higher yielding transactions even easier and therefore allowing better results in your forex tradingThe leverage forex trading strategy is used on a regular basis and allows investors to take advantage of short term fluctuations in the forex market.Another commonly used forex trading strategy is known as the stop loss order. This forex trading strategy is used to protect investors and it creates a predetermined point at which the investor will not trade. Using this forex trading strategy allows investors to minimize losses. This strategy can however, backfire and the investor can run the risk of stopping their forex trading which could actually go higher and it really is up to the individual trader to choose whether or not to use this forex trading strategy.An automatic entry order is another of the forex trading strategies that is commonly used and this strategy is used to allow investors to enter into forex trading when the price is right for them. The price is predetermined and once reached the investor will automatically enter into the trading.All these forex trading strategies are designed to help investors get the most from their forex trading and help to minimize their losses. As mentioned earlier knowledge of these forex trading strategies is vital if you wish to be successful in forex trading.

Online Currency Trading Tutorials

Whether are learning to drive a car or trade in the Forex market you benefit from the experience and knowledge of others. None of us ever really believe that we are an expert at something as soon as we try it for the first time. For this reason, unless you are already maintaining a healthy bank balance trading Forex then you can benefit from a tutorial in Forex trading.A tutorial in currency trading will help to teach you the basics, and even if you have been trading currencies for a while then you may still learn something new. You see, the Forex market is pretty complex and therefore it can take years to master it. For this reason taking the time to learn as much as possible will save you money in the long run.Not too long ago it was almost impossible to find anyone offering any kind of training or tutoring in Forex. This was mainly because trading was only open to large corporations and businesses. The situation is completely different nowadays as the Internet boom has opened the doors to individual traders and that has led to a massive increase in the number of courses and tutorials available.Training can be done online or in a classroom depending on your location and preference. There are so many ،®learn at home،¯ courses available now that if you think that is the way to go then all you have to do is pick one. Classroom learning is a little different since you may find yourself having to travel fair distances to get to your nearest course.Another advantage of an online tutorial is that not only do you get to learn from the comfort of your own home or office but you can also take things at your own pace. The downside however is that there is no teacher for the one to one discussions and explanation (the DVDs or online videos are your teacher) that you may sometime need.Some online currency trading tutorials come with a money-back guarantee, that is if you do not like their course you can return it for a refund. However, you should look out for those courses which claim to be able to guarantee you a profit. These kind of claims are hard to achieve and should be treated with sketiscm as some courses are no more than scams.Forex trading requires very quick thinking and decision making. Tutorials cannot teach you that. They can tell you the principles of trading and make you a much better trader for it. However, what it takes is for you to use the knowledge they give you and incorporate it in to your daily trading habits.Through the help of a course you decision making and speed can definitely be improved but they cannot tell you exactly when to enter or exit a trade. That said, if you take the time to learn everything you can then it will be much easier to call the next market move correctly. You can also look to the help of Forex signal service providers for further security.Currency trading tutorials can never teach you everything you will ever need to know. No-one can. However, they can help you to make decisions more quickly and with more success, it،¯s all about how you take the knowledge they give you and what you do with it.

Forex Money Management by FX Master

Money management is a critical point that shows difference between winners and losers. It was proved that if 100 traders start trading using a system with 60% winning odds, only 5 traders will be in profit at the end of the year. In spite of the 60% winning odds 95% of traders will lose because of their poor money management. Money management is the most significant part of any trading system. Most of traders don't understand how important it is.It's important to understand the concept of money management and understand the difference between it and trading decisions. Money management represents the amount of money you are going to put on one trade and the risk your going to accept for this trade.There are different money management strategies. They all aim at preserving your balance from high risk exposure.First of all, you should understand the following term Core equityCore equity = Starting balance - Amount in open positions.If you have a balance of 10,000$ and you enter a trade with 1,000$ then your core equity is 9,000$. If you enter another 1,000$ trade,your core equity will be 8,000$It's important to understand what's meant by core equity since your money management will depend on this equity.We will explain here one model of money management that has proved high anual return and limited risk. The standard account that we will be discussing is 100,000$ account with 20:1 leverage . Anyway,you can adapt this strategy to fit smaller or bigger trading accounts.

Can You Make Some Quick Money From Forex?

As a smaller investor, can you make some quick money trading on the Forex? The answer is yes. But, wait just a minute, not quite so fast!Most currency exchange trading takes place online. Trading may be conducted 24 hours a day from anywhere worldwide. Anyone connected to the internet from their home or office may be a trader, and there has been a rush of investors to this market in search of quick money.Speculators entering this market can take advantage of the many free tutorials available on the internet. Beyond anything else, if you are a beginner, it absolutely critical that you refrain from serious trading until you have gained sufficient confidence by paper trading in a demo account.Making that first trade can be an intimidating proposition if you are a first-timer. Forex brokerages have recognized this, and most have created methods where the novice trader can gain some hands-on experience without having to risk real money. With a demo account, a new investor can practice making trades for a period of time before investing real money on the market.Another cautious way of approaching the Forex market is to avail your self of a mini-account offered by many brokers. Here you can get your feet wet with a smaller initial investment than with a full blown trading account.One of the characteristics of currency trading is that profits can be realized in a matter of minutes, even seconds, unlike what you may have seen investing in stocks. This is attributable to rapid and random variations taking place in the foreign exchange market. So, it is in this fevered environment that you can make quick money.Although nothing in the investment world is really easy. A word of caution is in order. Numerous scams are showing up where companies offer to do your trading for you. Avoid these like the plague. Craft your own Forex strategies with an expert and trade solely on your own or through a licensed broker. No one should ever do your trading but you.Yes, you can make money quickly in the Forex market. Trading goes on 24 hours a day in this highly accessible, highly liquid market. Opportunity always lies at your fingertips. Take the cautious approach outlined here. Probe the accumulated knowledge base in much greater depth using online broker services, free tutorials and demo accounts which will provide you the foundation you need to make quick money trading on the Forex.Article by Robert G. KnechtelHappy Trading

Forex trading currency is fast becoming one of the easiest ways to earn large amounts of money on your investment. Then again, it can also be the easiest way to lose all of your money in a short period of time. That is, if you do not know what you are doing. The fact is that even seasoned traders make mistakes and only through the understanding of basic principles and the application of sound strategies can you be assured of earning money in the long run.One of the most basic things that you have to understand about Forex trading currency is that there will always be losing streaks along with the winning ones. Having this fact in mind will keep you going during those times that you do not get a good deal. The best way to handle Forex trading currency is to have a reliable trading system coupled with a rigid money management system.There are many different strategies trading employed in Forex trading currency today. What you should do is either adopt one of them or come up with your own. No matter which path you choose to take, the important thing is that your trading system has been proven or can be proven to be reliable. How would you know that your trading system is reliable?It is quite simple, really. A reliable trading system is one which gives you more winning trades than losing ones. More than this, your winning trades should be – in general – of greater value than your losing trades. You do not need to be a rocket scientist to figure this one out. More wins with greater value equals profits. No matter how you come up with your trading system, the bottom line is that you get consistent results.Once you have come up with your forex trading strategy, try it out first. You can do this by using a demo account before trading live. Using a demo account is advantageous as you will be doing exactly the same thing as live trading – without real money. This way, you can test your strategy and pick out the flaws if there are any.After you have tested your strategy, you are confident that you are getting consistent results, you could go live. Your strategy should not stop there, though. Once you engage in live trading, you must take care to instill strict discipline when it comes to money management. Do not deviate from your strategy once it is put in place. This is perhaps the foremost reason for traders to suddenly lose everything. Always remember that you cannot win all the time and that losses are part of trading. If you have a strategy in place, do not scramble to recoup your losses outside the boundaries of your strategy. The trend is that winning will come soon after your losses.One rule you should stick to is never trading with more than 2% of your account at risk on a single trade. Whether you win or lose, this percentage is going to get you the long term results that you are aiming for.Happy Trading

Beginners Education in Foreign Currency Trading

Forex trading is the most lucrative trading, in today's trade world and it seems everyone is ready to jump into the bandwagon of Forex trading. However, it is not as simple as it seems to be. To know how the Forex trade works, you need proper education about Forex and currency trading.Beginners education in Forex trading lets you understand the basics of Forex trading, how it works, benefits of trading Forex and how to make profits by selling and buying currency pairs.If you are a new player, you can do your homework with books available in the market. But the online sites offering beginners' education in forex trading has an advantage as you can do demo trading in simulated conditions to get the "feel" of the market without bothering about profit or loss. You will be amazed to find that just after few trades, the complex concepts seem to start making sense and you begin to understand Forex trading.Your beginners' education in forex trading site should provide:Basics Trading Introduction to ForexEconomic IndicatorsIntroduction to Technical AnalysisSee if you can pick up a program in online Forex trading that is being offered by a regulated brokerage firm. They are bound by federal laws to disclose all their transactions. You can find out their performance from Commodity Futures Trading Commission or National Futures Association Home Page.The beginners' education in Forex trading service should allow you margin trading, it is simply the trading with borrowed capital. This lets you open $10,000 or $100,000 positions with as little as $50 or $1,000. You can conduct large transactions, very quickly and cheaply, with a small amount of initial capital.The education in Forex trading site should be supported with software that can instantly calculate the spread, your sell or buying price etc. The guide should make their predictions based on market trends and not on predictions or speculations.A good beginner's education in Forex should offer real-time charts, technical analysis tools, real-time news and data, and software or website support. You should avoid such sites that offer limited information before you open the actual account.