E-Money Blog - Forex, CDF, Commodities - daily news and rates

By: Willie Reynolds

Yen! Euro! Dollar! Franc! Pound! There are many choices and decisions to make when it comes to forex trading, and the task can seem pretty daunting. If you have decided to try your hand at the foreign exchange market, newly opened to the individual investor through the advantages of online trading, the fact is that all the information you will need to gather and all the factors that will need to be taken into account in order to be profitable in your venture will only add to the confusion. There are several areas to consider when it comes to foreign exchange, factors that have their effects in many areas of a country’s economy and thus on the rate of foreign exchange.

Do not assume that just because you have chosen to invest in foreign exchange means that you are free from other areas of the market. Stocks have a direct and sometimes massive effect on a country’s rate of exchange. If a large corporation is planning on outsourcing or opening big offices in a country, whether the country is large or small, the news will have a direct affect on the rate of exchange. Locating to a country is an investment move on the part of the company itself, and thus signals its confidence in that country as a prospective capital gainer. The exchange rate of the country’s currency can be expected to directly reflect this view as corporate investors begin to invest in the company in foreign currency to match interest rates.

Likewise, commodity prices also have a direct impact on forex rates. A country with a large amount of a commodity that is in demand, such as oil and recently copper, will inevitably se its economy begin to grow stronger as a result of the rising prices. This will also affect any countries that are short on the commodity in demand, as they grow increasingly dependent on other countries for their economic functions at the ground level.

The domestic policy of a country in terms of economics can also directly impact its currency on the exchange market. In this way, democracy can have a huge role to play as far as the forex trader is concerned. An elected government that ushers in fiscal policies aimed at reducing debt and eliminating deficit will mean a stronger economy as less monies are put towards interest payments. The boost will inevitably play out in the currency value of the country.

It should be fairly obvious that any person who hopes to be a player when it comes to foreign exchange will need to commit to a certain amount of homework. The natural resources ofa country, its governmental policy, and its interest rates are all very important factors and can make or break a forex trade.

By: Alex Nguyen

Where do you go to trade money? How about the largest money market in the world, the Foreign Exchange currencies, also known as FOREX currencies. With a daily volume of $1.5 trillion US dollars, it eclipses the American stock markets exchange ($100 billion daily) by 15 times. Here are the top 7 cool reasons why you should not sleep tonight and start thinking about trading (and making) some serious money in the… well, money market.

1. Instant and hugh leverage
Where else can you find an investment vehicle that allows you to leverage your money massively? If you have $1000 and you drive down to your local stock brokerage and would like to open an account, he’ll allow you to “borrow” another $1000. So you can control up to $2,000, or 2:1 leverage. In real estate the leverage can be 10:1. A $100,000 home can be purchased with only $10,000 (10% down payment). However, FOREX provides the greatest leverage. With the same initial investment of $1,000, most FOREX brokerages will allow you to control $100,000 worth of currency. That’s 100:1 leverage! This is HUGH! This allowance is a major boost to the small investor. Imagine having $100,000 and being able to control $10 million! Did I mention HUGH!

2. High liquidity and no, I’m not talking about beverages!
Relax, there’s a buyer waiting to buy what you’ve got. Need to buy? Someone’s available to sell. There is always movement with the FOREX market. With such a massively high volume on daily exchanges, there is always a buyer or seller waiting in the wing.

3. Accessibility – Anywhere, Anytime
Well, almost anytime. Unlike the American stock market, which trades eight hours a day, five days a week, the FOREX market is open 24 hours a day, five days a week. Trades can be done via telephone or via the internet from your home or office.

4. No Whispering allowed in the FOREX market
It is true that the principle of supply and demand holds true for both the stock market and the FOREX market. However, the stock market has an inherent risk that is lacking in the FOREX market – insider information. A company news about massive infrastructure restructuring within might affect its stocks on a grand scale. Uncle Joe might know something about it and take necessary steps to secure his investments, while you’re out in the cold wondering what happened. The FOREX market is affected by national economic changes that cause the fluctuations in the FOREX market. Since news is easily assessable to everyone at the same time, there can’t be “insider information”. Don’t worry; you’ll at least get a blanket before you’re tossed out again!

5. No commission? No problemo!
If you’ve traded the stock market before, you’d know that you had to pay every time you bought or sold stocks. The same is true with real estate investment. When you wanna sell your property, you’d better fork out a chunk of money to pay your agent. When you buy a property, you might think that the seller pays your agent the commission. It’s not exactly true because when you buy it from an agent, you really purchase it at retail. So essentially the cost (commission) is footed by the buyer (you). It’s not the case with the FOREX market. You do not pay any commissions for any trade, regardless how big or small. Then how do brokers make money, you ask? Well, brokers earn their money by setting a ‘spread’ – the difference between what it can be bought at and what it can be sold at. You might even get lucky and not having to pay for spreads at all. FOREX OTC (over the counter) avoids exchange and clearing fees, which cuts transaction costs sufficiently. You deal directly with the market maker, thereby bypassing the middle man. What this means to you is NO COMMISSIONS, NO SPREADS! More money back in your pocket!

6. You don’t have to sell your home on eBay to get started.
To get started trading the FOREX market, all you need is a computer, a high speed internet connection, and some knowledge and tools. You’re set to go! No need for elaborate office setup. No overhead to spend. No inventories to look after. No need to fork out thousands of dollars to “own” a business, such is in the case of a franchise.

7. You can careless where the market is at.
Because you can make profit in both ends. FOREX has no restrictions on short selling. How cool is it that you can go long or short and know that the potential of getting income remains very high?

So the next time you’re at the beach with your wireless laptop on and have the urge to trade, go ahead and trade some Dollars for Euros. Who knows, with the right knowledge and tools at your disposal, you might make some serious money while having fun under the Sun.

Profitably Yours,

Alex Nguyen

By: Internet Wealth Mentor

We’re focusing on technical analysis in this article with a description of some of the important indicators.

We could say, all wealthy traders use technical analysis but not all technical analysis traders are wealthy although T.A. is the most precise way of trading the Forex market. It’s also useful note that fundamentals play their part in indicating whether a price will move up or down. It gives you the edge over other traders.

Technical Analysis is so powerful because of a few reasons

1) it represents numbers. All information and its impact on the market and traders is represented in a currency’s price.
2) It helps to predict trends and the foreign exchange market is very ‘trendy’.
3) Certain chart patterns are consistent, reliable and repeat themselves. T.A. helps us to see them.

Here’s one way of putting technical analsysis into perspective (wish I had a dollar each time I said ‘technical analysis’). We all know that prices move in trends. Research has shown that those that trade ‘with the trend’ greatly improve their chances of making a profitable trade.

Trends help you become aware of the overall market direction and often rescue us from less then profitable entry points. I attended a 2 day course costing me over $2500 AUD and the biggest thing I learned from it was the need for discipline and emotional control. The content was so basic that within the next 3 or 4 articles, I would have covered all of it. So learning the ‘tools of the trade’ the technical indicators and their applications will help you to diagnose what the market is doing but even then you need to expect ups and down and trade with emotional control.

Stay with the trend, follow the price.

Find the price of the currency pair. If EUR/USD is 1.4224 and moves to 1.4180 then 1.4090 then the market is in a down trend. Concern yourself only with what the market IS doing not what it might do. Listen to the markets and the indicators will backup what they are telling you.

Moving Averages.
Tell you the price at a given point of time over a defined period of intervals. They are called moving because they give you the latest price while calculating the average based on the selected time measure.

They lag the market so to give you an indication of a change in trend, use a shorter average such as a 5 or 10 day moving average. By combining a shorter term and longer term M.A. you can detect a buy signal when the shorter term crosses the longer term moving average in the upward direction. Or a sell signal if it crosses in a downward direction. For example, you could use a 5 day versus a 20 day moving average or a 40 day versus a 200 day moving average.
There are simple moving averages, linearly weighted which gives more importance to the recent prices or exponentially weighted. The latter is a favourite because it considers all prices in a time period but emphasizes the importance of the most recent price changes.

MACD
Based on moving averages, a MACD plots the difference between a 26 exponential moving average and a 12 day exponential moving average, with a 9 day used as a trigger line. If a MACD turns positive when the market is still plummeting it could be a strong buy signal. The converse also works.

Bollinger Bands (sounds like an elastic band)
Prices tend to stay between the upper and lower bands. They widen and become more narrow depending on the volatility of the market at the time. A sell signal would be when the moving average is above the Bollinger bands and vice versa for a buy signal. Some traders use it in conjunction with RSI, MACD, CCI and Rate of Change.

Fibonacci Retracement
Describe cycles found throughout nature and when applied to technical analysis can find shifts in the market trends. After a climb prices often retrace a large portion sometimes all of the original move. Support and resitance levels often occur near the Fibonacci retracement levels.

RSI
Relative Strength Index measures the market activity to see whether it’s overbought or oversold. This is a leading indicator so helps to indicate what the market is going to do (awesome!). Ahigher RSI number indicates overbought (so expect a bearish shift) and a lower number indicates oversold.

Successful traders will generally use 3 or 4 signals to provide a more conculsive signal before entering a trade.

Always remember, “If in doubt, stay out!” . Technical analysis doesn’t factor in political news, a country’s economic profile or fundamental supply and demand.

Technical Analysis helps us figure out how much money to risk on a trade. How and when to enter the market and how to exit the trade for profit or to minimize loss.

I sincerely hope you find this article useful.

Article Source: http://www.moneyarticlelibrary.com