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Recently I found on the net an interesting brainstorm regarding one topic that is not discussed so much. One young trader has exposed his thoughts about the various types of scam and the usual techniques to attract FOREX players to senseless lessons [not like the mine of course]. As a tempered trader I had this unpleasant experience during my first steps on the market. There are so many people that are offering you blatant and low-quality information related to the FOREX and all the currencies in general that is very easy not only to spend your money on some “high paying courses” but to lose tremendous amount of money just because you have fallen after a stupid advise.

So, your first step is to acknowledge the fact that there is free information all over the Internet - plenty of it. This means that you will be able to obtain the necessary data for your market analysis from many authoritative websites that will provide you with enough information and will even teach you how to do this without draining your tight wallet. Yep, that’s the true - the information is at your hands. At self-organizational level a good trader would prepare himself with few very reliable websites that he will use for source of information. Then follows the scheduling of his visits there and finally some technique to collect and analyze the data and - voila - you will have one weapon for free that will give you more deep view on the market. And that is the power take-off you need, indeed.

Some FOREX myths

1. “We have taken the emotion out of FOREX” - this is just ridiculous. This is not possible simply because the market is human driven huge machine and is not possible to predict the behavior of the market with analysis and emotionless calculations. Why is this? There is generally plenty of back-tested data to support the product. Never mind that you can nudge just about any formula to show a profit on canned data.

2. “Cracking the Forex trading code.” - this is driven by the simple idea that the people always search for some mystic and obscure techniques to gain easy profit. From the philosophical stone up to todays cracking and hacking techniques - it is all the same. You don’t need it cause this FOREX magic doesn’t exist. There are dependencies and various relations but it is much more complicated and naturally changing than a simple static code to crack!

3. “The Wounded Samaritan” - you have already read on the net many stories of such people. They started with incredible enthusiasm, lost enormous amount of money making mistake after mistake and when they finally gave up and decided to stop - the greatest sparkle of the whole FOREX idea appeared! And as effect they are making the huge profit now. Of course, these people are nothing but a tricky merchants willing to share with you their prosperous trading skills and techniques. But, stop for a moment and think about it - would anybody that makes these market hits would just sell the secret to you like a real Samaritan? Bet no.

As a conclusion of todays brainstorming I may advise you to follow your FOREX intuition and to avoid the traps mentioned above because the sweetest piece of the trading cake is the one gained with your efforts and mistakes. I would like to thank to P.K. Wells from associatedcontent.com for the inspiration to tickle my head on this particular topic. I hope you enjoyed the reading. 

“Continuing further with our short course and explanatory advises, today we will point our attention on something more specific - the trading characteristics. As usual the information for this FOREX topic will be provided once again from Wikipedia. You might ask: “Why did I choose this source of information to compile the short courses on currency trading?” Well you will see many useful links on the article. Every opens a new page with loads of information regarding the particular FOREX detail. I doubt that you will be able to find other unique source like the Wikipedia”. Let’s go now:

There is no single unified foreign exchange market. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currency instruments are traded. This implies that there is no such thing as a single dollar rate - but rather a number of different rates (prices), depending on what bank or market maker is trading. In practice the rates are often very close, otherwise they could be exploited by arbitrageurs.

The main trading centers are in London, New York, Tokyo, and Singapore, but banks throughout the world participate. As the Asian trading session ends, the European session begins, then the US session, and then the Asian begin in their turns. Traders can react to news when it breaks, rather than waiting for the market to open.

There is little or no ‘inside information‘ in the foreign exchange markets. Exchange rate fluctuations are usually caused by actual monetary flows as well as by expectations of changes in monetary flows caused by changes in GDP growth, inflation, interest rates, budget and trade deficits or surpluses, and other macroeconomic conditions. Major news is released publicly, often on scheduled dates, so many people have access to the same news at the same time. However, the large banks have an important advantage; they can see their customers’ order flow.

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX is expressed. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.2045 dollar. Out of convention, the first currency in the pair, the base currency, was the stronger currency at the creation of the pair. The second currency, counter currency, was the weaker currency at the creation of the pair.

On the spot market, according to the BIS study, the most heavily traded products were:

• EUR/USD - 28 %
• USD/JPY - 18 %
• GBP/USD (also called sterling or cable) - 14 %

and the US currency was involved in 89% of transactions, followed by the euro (37%), the yen (20%) and sterling (17%). (Note that volume percentages should add up to 200% - 100% for all the sellers, and 100% for all the buyers).

Although trading in the euro has grown considerably since the currency’s creation in January 1999, the foreign exchange market is thus far still largely dollar-centered. For instance, trading the euro versus a non-European currency ZZZ will usually involve two trades: EUR/USD and USD/ZZZ. The only exception to this is EUR/JPY, which is an established traded currency pair in the interbank spot market.

Todays FOREX course ends here. Thus you might have any other questions or doubts you can visit Wikipedia or e-mail me at the address provided in “Disclaimer” section. The rest is up to you, and I hope that the information you find here will be useful for you!

Welcome back to our site! Today we will continue with the short course that will help you gain better understandings of the FOREX market and the currency exchange techniques in general. In today’s free course we will focus on the spot and the futures in the FOREX game. Indeed, this is one of the most important details as it allows you to “play around” with the possibilities of the market and to have more flexibility in general. Without further delay, please enjoy more about this particular topic below:

Before a description of retail trading, it is important to understand the difference between the spot and futures markets. Futures are generally based on contracts, with typical durations of 3 months. Spot, on the other hand, is a two-day cash delivery. While the futures markets were created to hedge out risks and speculate on future market conditions, spot was created to allow actual cash deliveries. Spot developed a two-day delivery date to give those transporting the actual cash a window of time to receive it. While in theory there still is a two-day delivery date imposed after a forex transaction, this is effectively no longer used. Every day, at 5 pm EST (the predetermined end of the trading day) spot positions are closed and then reopened. This is done to guarantee an unlimited timeline for delivery. For example, if a spot transaction occurs on a Monday, the delivery date is Wednesday. At 5 pm on Monday, the position is closed and then immediately re-opened; now this is a new position with the close date of Thursday. This daily process allows an investor to hold open a position indefinitely.

Another important difference between futures and spot is how interest is credited. Each currency in a forex transaction has an inherent interest rate attached to it. In the case of the US dollar, this is the Federal Funds Rate. This interest is added every day whether the market is trading or not. Interest cannot take a vacation; money and its loaning value are still important even if the financial world has stopped dealing. In futures, the interest is built into the price of the contract. In spot, however, interest is not taken into account in the offering price because the spot market is a cash market, not a contract market. There must be some mechanism for crediting interest, and various institutions have developed ways to do it. The most common method is to credit that day’s worth of interest at the same time they “flip” the position, or carry it over to the next day. This is important for later discussions and analysis because the transactions examined in this study had interest credited at the end of the business day at exactly 5 pm EST. If a position was held from 5:01 pm on Tuesday and closed at 4:59 pm on Wednesday, no interest would be credited for that day. If, on the other hand, a position was opened Tuesday at 4:59 pm and closed Tuesday 5:01 pm, a full day’s interest would be credited. This has interesting ramifications; traders who work intra-day, or “day traders,” often do not use interest for either gain or loss.

That’s all for today folks. In case you’re having any questions or problems you can always contact me at my e-mail that is provided in section “Disclaimer” on the site. I will be with you shortly up to the end of February so… stay tuned and with clear mind on the FOREX market!