Global money trading involves the buying and selling of world’s currencies, par excellence the most formidable ones on the fx markets. Initially only the privileged few like the enormous banks and big shot financiers had access to this remarkably lucrative market. But with the ubiquitous presence of internet, the suitable time for trading in global forex is not restricted in the hands of the big players. The hobby investors can also tap the high profit potential of the forex market to make some great money.

There are some typical advantages related with trading money in the global forex market that has made it the world’s largest money spinning market.

foremost of all, while the national stock market operates with work hours, the Global forex stays open 24 hours a day. The fx-market opens every day in Sydney moving westward as the day advances. A truly globalized market, the trading moves around the globe as the trading opens in each major center, first to Tokyo, London, and New York. Thus, unlike any other financial market, you can instantly correspond to any type of fluctuations in any currency followed by economic, social and political events. And you can easily take decision the time they occur—day or night.

Unlike the domestic stock market, you do not have to deal with a share agent and do not have to pay any commsiion for making the trade. The FX market is Over the Counter type of market. It operates on the ‘interbank’ basis. Thus transactions are conducted between two parties in two different parts of the world via internet or over the telephone.

Then leverage is also essentially high in this market and practically you can make deals 100 times greater than the value of your deposit money.

You do not have to be present in person in the market to carry on the trade. As this market is not like any other markets you can think of. Trading is not restricted to any centralized location. Trading occurs worldwide and Forex is the world’s largest and most intense market.

The currency trading involves the business on the spot between the US dollar and the
six major currencies (Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar). Thus it is a enormous market which can not be controlled by any single factor or player. There is impossible for one man to control and manipulate the market in his favors. This trait makes it the most exciting market in the world. beside the major players like Central banks, private banks, multinational corporations, and money managers the little man in the street can also make unlimited money in the forex market.

So you can clearly see that there are significant opportunities of making money in this biggest market of the world. But there are risk factors as well. The aggressive day traders might experience substantial profit-loss swings per day.
Fortunately, there are no daily limits on foreign exchange trading and no restrictions on trading hours other than the weekend. This implies you will always get an opportunity to react to the particular trends and a lower risk of getting trapped into bad deals without the opportunity of getting out.

For newcomers, Forex trading can sometimes be a complex undertaking because of its technical and ever changing nature. It takes much time and personal commitment to learn Forex trading, and you need to grasp quickly the basics of the currency market.

Key Principles

To minimize losses early on, beginners must understand fully the key principles underlying currency markets. For example, you need to know the currency markets are highly organized, and information affecting the German currency market would have an immediate impact on markets in the United States, or Canada, or Japan.

You also need a good grasp of basic trading skills such as opening a trade, applying leverage, and reading simple graphs showing currency movements. However, it is important to remember you do not need to know everything about the currency market to start trading. Once you know the basics, you are ready to make your first trade.

Trade 24/7

Forex trading markets run on a 24-7 basis. Making successful trades means watching your trades, and paying attention to the news about the financial markets. Currency values will rise and fall with economic news, political intervention, and volume trading, for example. So, if you place trades and ignore market events, you can lose your initial capital, and get a call from your broker to add more money to your account.

It is unlikely the average person will reach expert status when they begin to learn Forex trading. However, it is not difficult to get enough fundamental understanding of the currency market to start trading and make some money. Although there are many and varied approaches available to learn Forex trading, by and far the most common starting point is by the Internet.

Online Training

There are hundreds of online sites that offer newcomers training in Forex trading. And, just as with any other online learning venture, you should gather enough information about the trainers before sending your money away. Unscrupulous dealers posing as genuine sites can trick you into buying training that is all but worthless. So, your first lesson is learning how to sort out the helpful information from the useless dribble.

You do not need a background in investing to learn Forex trading, but it would help you master the basics. After all, the first rule of any investing is playing to win. If you put your money into a deposit certificate, you would expect a return after 3 months or so. Similarly, if you trade currencies you want to get back more money at the end than you put in.

Of course, if you are just playing the markets for fun, to ease your boredom, then you do not have to worry about getting a return on your investment. However, if you are like most people, you want your initial investment to bring back more money than you put in. And you can get a good return on your investment if you commit to learning Forex trading, either on your own or from a trainer or mentor.

The good news is once you find a reputable online training center, you will get access to a Forex trading platform. You can make trades while learning without risking any money. This means you can open a “mini” trading account where you can place dummy trades in real time while you continue to learn the market.

Forex trading offers the beginner the potential for huge profits, but you need to make your first investment in learning how to win big at the currency game.

The promise of “Easy Money” captures the interest of many beginning traders. You can find offers all over the Internet claiming, “risk free trading”, “low investment”, and “high returns”. While there is some truth in these statement you will find that they are over simplified and the reality of FOREX trading is a little more complicated.

It is very tempting to dive right in and start trading as soon as you open your FOREX account. Doing this will most likely lead you to make the two most common mistakes of beginning investors. These are trading based on emotions and trading without a philosophy or strategy. While watching the movements of a currency pair you may feel that you are letting an opportunity pass by if you don’t get involved. So you buy only to see the price start moving against you, in a panic you sell at a loss, to then watch the price recover.

You must have a rational strategy and not base any decisions on emotion. Undisciplined trading like the scenario described above will only lead to losing money.

You have to be well educated in market movements to make rational trading decisions. You must be able to read technical studies and analyses and use that information to plot out entry and exit points. You must be able to use the various types of trade orders available to maximize your profits and minimize your losses.

The first thing you have to do is to understand the market and the forces that move it and affect it. Learn who trades on the FOREX market and why do they do it. Who are the successful traders and what do they do that makes them successful. By doing this you will be able to identify the successful trading strategies and use them to help you develop a strategy of your own.

Banks, Corporations, Governments, investment funds, and traders are the major groups of investors in the foreign exchange market. While they all have their own objectives four of these five all have one thing in common. They have external controls; these are rules and guidelines that control the trades that they make and the basis that they can be held accountable to. The exception to that is the individual traders, they are accountable only to themselves.

A trader that enters the market with out rules and guidelines is setting himself or herself up to lose money. The “big boys” and the well educated investors all approach trading with strategies, if you want to play on the same field with them and be successful you will have to play by the same rules. You absolutely must have a trading strategy, and you will need to be disciplined and follow it.

Money management is a critical part of every trading strategy. Along with knowing which currencies to trade and how to recognize entry and exit points as successful trader must has to manage his available resources and make money management part of his trading plan. Available capital, margin and profits and losses must all be considered as part of strategy development.

The Forex, and also known as “The Foreign Exchange” market exists wherever one currency is traded for another. It’s the largest financial market in the world. Simply if we compare the New York Stock Exchange trades vs changing hands in forex, we will discover Forex market is a lot of times larger than both Equity and Treasury markets combined.

Forex or “Foreign Exchange” is where the money of one nation is traded with another. The most important and popular pairs of exchange in the forex market are “Euro Dollar”, and you will see this pairs in all forex display screens as “EUR/USD”. There are also a lot of others pairs but sure not important and not famous as “EUR/USD” pairs, like:-

1-The British Pound, and you will see this pairs in all forex display screens as “GBP/USD”.

2- The Japanese Yen, and you will see this pairs in all forex display screens as “USD/JPY”.

3- The Swiss Franc, and you will see this pairs in all forex display screens as “USD/CHF”.

However there is a problem in the forex market until this day, there is no one central exchange where everyone can exchange the currency. All the currency traded are done over the telephone and online through a very big networks that connects all the banks, brokers and currency traders with each others.

Currency trading in the past was just for the banks, but today and after the new revolution electronic economy, online forex trading companies start to offer a lot of services to all traders around the world. Today if anyone have a computer and internet connection can easily start to trade currencies, but sure the experience and analysis is very important to success in forex game.

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There are some guidelines you must read before entering foreign exchange market. Following these guidelines will make you a better prepared forex trader.

1. Plan your trades

Plan your entry/exit to the market, plan when you will sell for losses, plan where your maximum profits will be. Professional trader must be discipline.

2. Market trend is a friend

Don’t ever argue over the trend. When the trend is up go for a buy and when the market trend is going down then go for a sell. You’ll get no losses as long as you follow the trend.

3. Focus on your capital

This is the most important, do not be greedy considering your capital is on the open. Use only 10%-30% of your capital. Don’t exceed 50% of your capital, because you can’t retain the market ups and downs and you will in the margin.

4. Know when to stop losses

If you made a mistake in the analysis, sell it, and let it happen. Don’t hold on a false hope that the price will go up. This false-hope condition can cause a very great loss. When you re-enter the market, make sure your stop-loss position, and when you have to let your money go to take your losses.

Just like the other, in forex you’ll win and you’ll lose, but don’t lose till you’re broke.

5. Take up gains when the trade is going up

Before you enter the market, decide how much profit you will gain. When you enter the gain you wanted, close your position. Just let the price wanders around and don’t fall on false hope.

6. Don’t be rational with your feeling

The most common enemy of trader is greed and scare. Don’t let this two overrule you or be ready to have -$100 from $100 in your account. Professional trader won’t ever show his emotion, you won’t even know whether he’s taking profit or losing money just by the look in his face.

7. Don’t trade because of signal from a friend or broker.

Trading fall on your own analysis, signal is only an opinion, don’t make signal your main concern.

8. Make a note

Write things you buy and sell, and write down why it had to be executed. When you accomplish or fail, look up your notes again. Your trading skill will develop far better.

9. Don’t enter the market when you’re in doubt

When you don’t know where you’re going, try to sit quite and analysis until you are sure. Stand back usually is the best way.

10. Don’t exceed your capabilities in trading

In a single moment, having 3-5 position is normal, not more, cause opening up position will blur you and lose control and your feeling will rule your logic. For beginners try to play only with a pair of currency.

Just as with any investment, the entire goal of investing in the foreign currency exchange market is to make a profit. The thing you must always remember though, is that just like with any other market investment, you can also lose. The reason that savings accounts and insurance policies pay such low rates of interest is because of the lack of risk. Conversely, the investments with the greatest potential of gain are also coupled with the greatest risk. There are ways of minimizing your risk when you are trading in the Forex markets; I have listed a few below.

First off, probably more than any other market, trading in foreign currency fluctuates constantly and it is crucial to stay informed of current news and political changes. Most Forex traders have a 24-hour cable news channel on constantly as well as multiple news agencies delivering news to their computers.

Another area that will help you immensely is having a good grasp on economics. If you never took a class in high school or college you should consider doing so. Subscribe to journals and buy books authored by top economists like Walter Williams and John Maynard Keyes. You should also subscribe to periodicals such as the Business Investors Daily and the Wall Street Journal.

Take advantage of the availability of a demo account, which will allow you to practice trading before you use real money. I cannot emphasize this enough. If the broker you are considering doesn’t offer a demo account, find one that does.

Do your due diligence and investigate the broker you are intending to open a Forex trading account with. It is essential to be able to trust the people you are dealing with and make sure they are trustworthy.

Another great way to learn the business, as well as get great tips, is to forge friendships and alliances with other Forex traders who have a lot of experience. This should be a no brainer but you would be amazed at the number of people who try to play “Lone Ranger”.

Be a good student of the industry and read everything you can find about the foreign exchange market and study the charts and historical trends.

There are also some good courses available on Forex Trading. I recommend taking one, especially if you are a new investor. A good Forex trading course can save you a ton of money by educating and teaching you what you should do as well as what not to do. Don’t make the mistake of thinking you can just wing it. This is a serious business.

As I tell people all the time, only invest money that you can afford to lose, just as if you were placing a bet. This is the cause of most people’s heartache, since they only think of the potential for big gains and forget about the potential for big losses.

Forex currency trading is a zero sum game and those with a trading plan and the necessary discipline to stick to it will succeed over those that trade without one. If you want to be on the positive side of this game start with your trading plan - it is your most important weapon against your opponents. Here is an example of what a Forex Trading Plan should look like:

Goal

My goal is to make 20 ticks or $200 per day over the 20 day trading period.

Market

My target market is the EUR/USD spot market. Trading style is day trading with all trades taking place between 8:30 am and 11:00 am on class days. On certain occasions I will attempt to start trading at 7:20 am due to the fact that a majority of economic data is released at 7:30 am CST. All positions will be closed at the end of class.

Research and Fundamentals

Each day before trading I will fill out a trading plan for the day. I will also research fundamental data related to the markets before I start trading. This is to get a market feel such as overall macro trends, world events, upcoming economic data. I will also look into technical data over the past several days to figure out what technical movement has been present.

Charts

Candlestick charts are important for day-trading. I will use two charts; 5-min and 4 hr. I use the 4 hr charts to identify the major trends and the 5 minute chart to get minor trend timing.

Strategy

Before anything else I need to establish the minor trend. Although I will look at the 4 hr chart to get a broader view of the market, given the amount of time I have to trade, I feel it is more important to focus on the short term trend. If there is consolidation or any other non-committal movement on the minor trend, then I will stay out of trading until a trend presents itself. I will use western technical analysis (DailyFX resistance/support, Moving Averages) to get a general feel of which direction the market is going and eastern technical analysis to time my entry and exit points. Although technical analysis is the basis for my trading, if there is fundamental information that comes out that clearly swings the market against the trend I will go with the strength of the reaction towards the fundamental data.

1. The first step I will take is to determine whether the short term trend is bullish or bearish

2. I will check to see if there are any key psychological numbers and support/resistance points in the near future

3. If there are none, I will go long or short depending on the short term trend

4. If there are, I will wait until the market reaches those numbers to look for a reversal

5. I will trade against the trend if I find a candlestick reversal pattern with confirmation (Bullish Engulfing, Hammer, Morning Star, Shooting Star)

6. When trading against the short term trend, I will set my limit at the 50% fib retracement level

Rules of the Plan

1. Never trade during consolidation

2. ALWAYS close out a trade if the MAs cross against a position

3. Try to achieve 10 tics on every trade, 1 lot = 10 tics, 2 lots = 5X2 etc.

4. Stop set at 40 tics

5. Momentum should correspond with short term trend when looking for entry point into a trade

6. Get out of a trade before major economic data is released

7. Don’t make a trade within 10 mins of class ending

8. Always get out a trade the second you think it is going against you

Forex, as you very well know, is the largest financial market in the world. Unlike many other markets, the international forex market is open 24 hours a day. Its daily turnover is well over US$ 1.2 trillion. This turnover is more than the combined turnover of the world’s major stock markets on any given day. Hence, the international forex market is a very liquid, and thus, a desirable market for trading. As with any other market, technology has also contributed immensely towards its expansion. Now trades are executed increasingly through the internet. It has allowed even smaller investors the access to the market.

In this market you may buy or sell currencies. The objective is to earn a profit from your position. Placing a trade in the foreign exchange market is simple: the mechanics of a trade are virtually identical to those found in other markets, so the transition for many traders is often seamless.

Here are an example of how forex trading works. Say, a trader purchases 10,000 euros in the beginning of 2004 at the EUR/USD rate was .9600. In May of 2006 the trader exchanges his 10,000 euro back into US dollar at the market rate of 1.1800. In this example, the trader earned a gross profit of $2,200.

Currencies are quoted in pairs, such as EUR/USD or USD/JPY. The first listed currency is known as the base currency, while the second is called the counter or quote currency. The base currency is the “basis” for the buy or the sell. For example, if you BUY EUR/USD you have bought euros (simultaneously sold dollars). You would do so in expectation that the euro will appreciate (go up) relative to the US dollar.

Buying/Selling

First, the trader should determine whether they want to buy or sell. If they want to enter a short order – whereby they will profit if the exchange rate falls – they simply need to click on the SELL rate. The opposite holds true for traders who enter buy orders: they can simply click on the BUY rate, and thus will profit if the exchange rate goes up.

Just like in all markets, there are two prices for every currency pair. The difference between these two prices is the spread, or the cost of the trade.

Margin

The margin deposit is not a down payment on a purchase of equity, as many perceive margins to be in the stock markets. Rather, the margin is a performance bond, or good faith deposit, to ensure against trading losses. The margin requirement allows traders to hold a position much larger than the account value.

In the event that funds in the account fall below margin requirements, the forex broker will close some or all open positions. This prevents clients’ accounts from falling into a negative balance, even in a highly volatile, fast moving market.

Example of How Margin Works

Since the trader opened 1 lot of the EUR/USD, his margin requirement or Used Margin is $1000. Usable Margin is the funds available to open new positions or sustain trading losses. If the equity (the value of his account) falls below his Used Margin due to trading losses, his position will automatically be closed. As a result, the trader can never lose more than he/she deposits.

Rollover

For positions open at 5pm EST, there is a daily rollover interest rate that a trader either pays or earns, depending on your established margin and position in the market. If you do not want to earn or pay interest on your positions, simply make sure it is closed at 5pm EST, the established end of the market day.

Since every currency trade involves borrowing one currency to buy another, interest rollover charges are an inherent part of forex trading. Interest is paid on the currency that is borrowed, and earned on the one that is purchased. If a client is buying a currency with a higher interest rate than the one he/she is borrowing, the net differential will be positive – and the client will earn funds as a result. Please note that clients must be on 2% margin in order to earn funds.

There is so much talk about NASDAQ and NYSE, but how many people are aware of another similar market, called Forex Markets? Forex Market has ten times the average daily turnover of many similar global equity markets. Also, foreign exchange markets have thirty the times of the daily volume of NASDAQ and NYSE. Markets are also the most liquid market in the world with one of the highest turnovers ever recorded, estimated at $2 trillion in one day.

Foreign exchange markets, also known as FX or the foreign exchange is actually a decentralized market, commonly known as an Interbank or interdealer market. One of the main duties of FX Markets is to trade. Foreign banks, currency dealers and different Forex investors use the facility as a type of trading post. They use it to exchange foreign currencies, from all over the world. Of course for this to work in the best way, it has no centralized location. This is because all business is conducted online.
For a long time the main people that used Forex Markets were the banks. Recently though, FX Markets acquired the ability to leverage large positions with not very much available capital. This means that it is now a more liquid market and more easily accessible to smaller companies that would like to get involved as well.

From New Zealand, to Australia, to Asia, the Middle East, Europe and America, Forex Markets is open twenty-four hours a day. All the major markets, including London, New York, and Tokyo are part of it. Of course the United Kingdom and the United States account for over fifty percent of the turnover. When the time of day comes for all the major markets to overlap, trading can get pretty heavy.

Besides the major markets there are also five main currencies that are a part of Foreign exchange Markets. These currencies include the United States Dollar, the Euro, the Yen, the Franc and the British Pound. Each of these is traded in what are called pairs. In this particular market they are also called crosses, in what is known in the Forex Markets as the ’spot’ market. A lot of this market is determined by supply and demand of certain major currencies and how they affect the current world market and its situations.

For those who have the money and the know how to survive on the world market, this market could be their best option. Being able to really read the current market and the world situation is definitely a plus when it comes to this market. If you have the need or the want to trade on the world market and are comfortable with what you know about it, Forex Markets are definitely the way to go.

Global money trading involves the buying and selling of world’s currencies, par excellence the most formidable ones on the fx markets. Initially only the privileged few like the enormous banks and big shot financiers had access to this remarkably lucrative market. But with the ubiquitous presence of internet, the suitable time for trading in global forex is not restricted in the hands of the big players. The hobby investors can also tap the high profit potential of the forex market to make some great money.

There are some typical advantages related with trading money in the global forex market that has made it the world’s largest money spinning market.

foremost of all, while the national stock market operates with work hours, the Global forex stays open 24 hours a day. The fx-market opens every day in Sydney moving westward as the day advances. A truly globalized market, the trading moves around the globe as the trading opens in each major center, first to Tokyo, London, and New York. Thus, unlike any other financial market, you can instantly correspond to any type of fluctuations in any currency followed by economic, social and political events. And you can easily take decision the time they occur—day or night.

Unlike the domestic stock market, you do not have to deal with a share agent and do not have to pay any commsiion for making the trade. The FX market is Over the Counter type of market. It operates on the ‘interbank’ basis. Thus transactions are conducted between two parties in two different parts of the world via internet or over the telephone.

Then leverage is also essentially high in this market and practically you can make deals 100 times greater than the value of your deposit money.

You do not have to be present in person in the market to carry on the trade. As this market is not like any other markets you can think of. Trading is not restricted to any centralized location. Trading occurs worldwide and Forex is the world’s largest and most intense market.

The currency trading involves the business on the spot between the US dollar and the
six major currencies (Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar). Thus it is a enormous market which can not be controlled by any single factor or player. There is impossible for one man to control and manipulate the market in his favors. This trait makes it the most exciting market in the world. beside the major players like Central banks, private banks, multinational corporations, and money managers the little man in the street can also make unlimited money in the forex market.

So you can clearly see that there are significant opportunities of making money in this biggest market of the world. But there are risk factors as well. The aggressive day traders might experience substantial profit-loss swings per day.
Fortunately, there are no daily limits on foreign exchange trading and no restrictions on trading hours other than the weekend. This implies you will always get an opportunity to react to the particular trends and a lower risk of getting trapped into bad deals without the opportunity of getting out.